Utease Corporation has several production plants nationwide. A newly opened plant in Dubuque 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 20,000 units or 44,000 direct labor hours):     Direct materials (2.7 pounds at $20) $ 54.00     Direct labor (2.2 hours at $80)   176.00     Variable overhead (2.2 hours at $30)   66.00     Fixed overhead (2.2 hours at $40)   88.00     Standard cost per unit $ 384.00     Budgeted selling and administrative costs:         Variable $ 4   per unit Fixed $ 1,800,000         Expected sales activity: 18,000 units at $500 per unit Desired ending inventories: 12% of sales   Assume this is the first year of operations for the Dubuque plant. During the year, the company had the following activity.             Units produced   19,000     Units sold   17,500     Unit selling price $ 495     Direct labor hours worked   41,300     Direct labor costs $ 3,345,300     Direct materials purchased   55,300   pounds Direct materials costs $ 1,106,000     Direct materials used   55,300   pounds Actual fixed overhead $ 1,300,000     Actual variable overhead $ 1,220,000     Actual selling and administrative costs $ 2,172,000          In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold.   f. Calculate the actual plant operating profit/loss for the year.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

 

Utease Corporation has several production plants nationwide. A newly opened plant in Dubuque 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 20,000 units or 44,000 direct labor hours):

 

 
Direct materials (2.7 pounds at $20) $ 54.00    
Direct labor (2.2 hours at $80)   176.00    
Variable overhead (2.2 hours at $30)   66.00    
Fixed overhead (2.2 hours at $40)   88.00    
Standard cost per unit $ 384.00    
Budgeted selling and administrative costs:        
Variable $ 4   per unit
Fixed $ 1,800,000    
 

 

Expected sales activity: 18,000 units at $500 per unit

Desired ending inventories: 12% of sales

 

Assume this is the first year of operations for the Dubuque plant. During the year, the company had the following activity.

 

         
Units produced   19,000    
Units sold   17,500    
Unit selling price $ 495    
Direct labor hours worked   41,300    
Direct labor costs $ 3,345,300    
Direct materials purchased   55,300   pounds
Direct materials costs $ 1,106,000    
Direct materials used   55,300   pounds
Actual fixed overhead $ 1,300,000    
Actual variable overhead $ 1,220,000    
Actual selling and administrative costs $ 2,172,000    
 

  

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

 

f. Calculate the actual plant operating profit/loss for the year.

Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Decision to Sell before or after additional processing
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education