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 fey 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 accu mulate 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 Estimated machine hours Estimated direct labor hours Estimated direct materials cost $1,053,000 48,000 8,000 $1,520,000 Maverick's inventory count, completed on December 31, 2013, revealed the following ending inventory balances Raw Materials Inventory Work in Process Inventory Finished Goods In ventory $249,000 $626,000 $1,530,000 The company's 2014 payroll data revealed the following actual payroll costs for the year: Annual Total Hours Number Wage Rate Salary per Worked per Emploved Job Title er Hour Employee Em ployee $225,000 $177,000 $40,600 $30,600 President and CEO Vice president and CFO Factory manager Assistant factory manager Machine operator Security guard, factory Materials handler Corporate secretary Janitor, factory $14.50 $7.50 $6 2,250 2,000 2,150 $20,600 $37,000 The following information was taken from Maverick's Schedule of Plant Assets. All assets are depreciated using the straight-line method Purchase Price Salvage Value Useful Life 20 Years 30 Years 12 Years Plant Asset Factory building Administrative office Factory equipment $4,000,000 $650,000 $2,000,000 $150,000 $125,000 $20,000 Other miscellaneous costs for 2014 all paid in cash included Amount $14,000 $5,100 $30,600 $4,400 Cost Factory insurance Administrative office utilities Factory utilities Office supplies Additional information about Maverick's operations in 2014 includes the following: Raw materials purchases for the year amounted to 1,948,000. All purchases were on account. Maverick applied overhead to Work in Process In ventory based on direct materials cost Maverick uses a markup of 80% to price its airplanes. Sales for the year were $6,570,000 The company used $1,870,000 in raw materials during the year. Of that amount, 85% was direct materials and 15% was indirect materials . Airplanes costing $3,450,000 to manufacture were completed and transferred out of Work in Process In ventory (Note: This transaction requires two journal entries.) e All sales were on account. what was Maverick's predetermined overhead rate in 2014? (Round answer to 2 decimal places, e.g. 2.45%.) Predetermined overhead rate 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 O decimal places % of direct materials cost e.g. 345,000.) No. Account Titles and Explanation Debit Credit (To record salar ies for president, vice president, and corpoarte secretary) 2. (To record labor costs for factory manager, assistant factory manager, and two security gaurds) (To record direct labor) 4. (To record depreciation on administrative office equipment)
