Maverick wings inc manufactures airplanes for use in stunt

Question

Problem 4-30 Maverick Wings, Inc. manufactures airplanes for use in stunt shows. Maverick's factory is highly automated, using the latest in robotic technology. To keep costs low, the company employs as few factory workers as possible. Since each plane has different features (such as its shape, weight, and color), Maverick uses a job order costing system to accumulate product costs. At the end of 2013, Maverick's accountants developed the following expectations for 2014 based on the marketing department's sales forecast: Budgeted overhead cost $1,132,000 Estimated machine hours 45,000 Estimated direct labor hours 10,000 Estimated direct materials cost $1,500,000 Maverick's inventory count, completed on December 31, 2013, revealed the following ending inventory balances: Raw Materials Inventory $250,000 Work in Process Inventory $625,000 Finished Goods Inventory $2,950,000 The company's 2014 payroll data revealed the following actual payroll costs for the year: Job Title Number Employed Wage Rate per Hour Annual Salary per Employee Total Hours Worked per Employee President and CEO 1 $225,000 Vice president and CFO 1 $177,000 Factory manager 1 $40,800 Assistant factory manager 1 $33,300 Machine operator 5 $14.50 2,250 Security guard, factory 2 $20,500 Materials handler 2 $7.50 2,000 Corporate secretary 1 $36,400 Janitor, factory 2 $6 2,150 The following information was taken from Maverick's Schedule of Plant Assets. All assets are depreciated using the straight-line method. Plant Asset Purchase Price Salvage Value Useful Life Factory building $4,000,000 $150,000 20 Years Administrative office $650,000 $125,000 30 Years Factory equipment $2,000,000 $20,000 12 Years Other miscellaneous costs for 2014 all paid in cash included: Cost Amount Factory insurance $12,500 Administrative office utilities $5,700 Factory utilities $33,400 Office supplies $5,200 Additional information about Maverick's operations in 2014 includes the following: Raw materials purchases for the year amounted to $1,946,000. All purchases were on account. • The company used $1,860,000 in raw materials during the year. Of that amount, 85% was direct materials and 15% was indirect materials. • Maverick applied overhead to Work in Process Inventory based on direct materials cost. • Airplanes costing $3,450,000 to manufacture were completed and transferred out of Work in Process Inventory. • Maverick uses a markup of 80% to price its airplanes. Sales for the year were $6,570,000. (Note: This transaction requires two journal entries.) • All sales were on account. Warning Don't show me this message again for the assignment Ok Cancel

What was Maverick's predetermined overhead rate in 2014? (Round answer to 2 decimal places, e.g. 2.45%.) Predetermined overhead rate % of direct materials cost Warning Don't show me this message again for the assignment Ok Cancel Show List of Accounts Link to Text

Prepare the journal entries to record Maverick's costs for 2014. (Use Salaries Payable and Wages Payable accounts for payroll costs.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Post entries in order presented in the problem. Round answers to 0 decimal places, e.g. 345,000.) No. Account Titles and Explanation Debit Credit 1. (To record salaries for president, vice president, and corpoarte secretary) 2. (To record labor costs for factory manager, assistant factory manager, and two security gaurds) 3. (To record direct labor) 4. (To record depreciation on administrative office equipment) 5. (To record depreciation on factory building and equipment) 6. (To record administrative office utilities and office supplies expense) 7. (To reocrd factory insurance and factory utilities) 8. (To record raw materials purchases) 9. (To record direct materials and indrect materials used in production) 10. (To apply overhead to work in process) 11. (To record transfer of completed airplanes) 12. (To record cost of airplanes sold) 13. (To record sale of airplanes to customers)