San Diego State University Operations And Supply Chain Management Assignment Help - Method

Question - Utease Corporation has many production plants across the midwestern United States. A newly
opened plant, the Bellingham plant, produces and sells one product. The plant is treated, for
responsibility accounting purposes, as a profit center. The unit standard costs for a production unit,
with overhead applied based on direct labor hours, are as follows:

Manufacturing costs (per unit based on expected activity of 35,000 units or 45,500 direct labor hours):
Direct materials (2.0 pounds at $12) $ 24
Direct labor (1.3 hours at $80) 104
Variable overhead (1.3 hours at $10) 13
Fixed overhead (1.3 hours at $20) 26

Standard cost per unit $ 167





Budgeted selling and administrative costs:
Variable $ 3 per unit
F ...Read More ixed $ 1,600,000

Expected sales activity: 31,000 units at $300 per unit
Desired ending inventories: 18% of sales

Assume this is the first year of operations for the Bellingham plant. During the year, the company had
the following activity:
Units produced 34,000
Units sold 32,500
Unit selling price $ 295
Direct labor hours worked 43,700
Direct labor costs $ 3,539,700
Direct materials purchased 72,000 pounds
Direct material costs $ 864,000
Direct material used 72,000 pounds

Actual fixed overhead $ 1,300,000
Actual variable overhead $ 355,000
Actual selling and administrative costs $ 1,793,000


In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of
goods sold.

1. Assume Utease Corporation is planning to change its evaluation of business operations in all plants
from the profit center format to the investment center format. If the average invested capital at the
Bellingham plant is $9,430,000, compute the return on investment (ROI) for the first year of
operations. Use the DuPont method of evaluation to compute the return on sales (ROS) and capital
turnover (CT) for the plant. (Round your answers to2 decimal places)

ROI %
ROS %
Capital Turnover % ...Read Less

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