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	$1,122,000
Estimated machine hours	44,000
Estimated direct labor hours	10,000
Estimated direct materials cost	$1,510,000

Maverick?s inventory count, completed on December 31, 2013, revealed the following ending inventory balances:

Raw Materials Inventory	$249,000
Work in Process Inventory	$625,000
Finished Goods Inventory	$430,000

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	$226,000
Vice president and CFO	1	$178,000
Factory manager	1	$40,000
Assistant factory manager	1	$30,500
Machine operator	5	$14.50	2,250
Security guard, factory	2	$20,600
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	20Years
Administrative office	$650,000	$125,000	30Years
Factory equipment	$2,000,000	$20,000	12Years

Other miscellaneous costs for 2014 all paid in cash included:

Cost	Amount
Factory insurance	$12,400
Administrative office utilities	$5,100
Factory utilities	$30,300
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 $1,870,000 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.

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

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)

Prepare the appropriate T-accounts for Raw Materials Inventory, Work-in-Process Inventory, Finished Goods Inventory, Manufacturing Overhead Control, Cost of Goods Sold, and Sales, and record Maverick?s transactions for 2014.(Post entries in order presented in the problem. Round answers to 0 decimal places, e.g. 345,000.)

Raw Materials
Bal.		Bal.
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
Bal.		Bal.

Work in Process Inventory
Bal.		Bal.
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
Bal.		Bal.

Finished Goods Inventory
Bal.		Bal.
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
Bal.		Bal.

Manufacturing Overhead
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
Bal.		Bal.

Cost of Goods Sold
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)

Sales Revenue
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)

Was manufacturing under- or overapplied in 2014? By how much?(Round answer to 0 decimal places, e.g. 345,000.)

OverheadsUnderappliedOverapplied by

$

Make the adjusting entry necessary to close the under- or overapplied overhead to cost of goods sold.(Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 345,000.)

Account Titles and Explanation	Debit	Credit

If Maverick chooses instead to prorate under- or overapplied overhead, what would the adjusted balances be in Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold for 2014?(Round answers to 0 decimal places, e.g. 345,000 and percentage of total to 2 decimal places e.g. 34.52).

Adjusted Balance
Work In Process	$
Finished Goods	$
Cost of Goods Sold	$

Job 3827 was started and completed in 2014. The job required 700 machine hours, 400 direct labor hours, and $77,000 in direct materials to complete. What was the total cost of this job? Using Maverick?s 80% markup, what sales price would be charged for this airplane?(Round answers to 0 decimal places, e.g. 345,000.)

Total Cost	$
Sales Price	$

If Maverick had chosen to use machine hours as its overhead application base, what would the rate have been in 2014?(Round answer to 2 decimal places, e.g. 2.45.)

Predetermined rate

$/Labour hourMachine hour

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	$1,122,000
Estimated machine hours	44,000
Estimated direct labor hours	10,000
Estimated direct materials cost	$1,510,000

Maverick?s inventory count, completed on December 31, 2013, revealed the following ending inventory balances:

Raw Materials Inventory	$249,000
Work in Process Inventory	$625,000
Finished Goods Inventory	$430,000

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	$226,000
Vice president and CFO	1	$178,000
Factory manager	1	$40,000
Assistant factory manager	1	$30,500
Machine operator	5	$14.50	2,250
Security guard, factory	2	$20,600
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	20Years
Administrative office	$650,000	$125,000	30Years
Factory equipment	$2,000,000	$20,000	12Years

Other miscellaneous costs for 2014 all paid in cash included:

Cost	Amount
Factory insurance	$12,400
Administrative office utilities	$5,100
Factory utilities	$30,300
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 $1,870,000 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.

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

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)

Prepare the appropriate T-accounts for Raw Materials Inventory, Work-in-Process Inventory, Finished Goods Inventory, Manufacturing Overhead Control, Cost of Goods Sold, and Sales, and record Maverick?s transactions for 2014.(Post entries in order presented in the problem. Round answers to 0 decimal places, e.g. 345,000.)

Raw Materials
Bal.		Bal.
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
Bal.		Bal.

Work in Process Inventory
Bal.		Bal.
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)		(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)
Bal.		Bal

Print by: Abby Bachman GB519: Measurement and Decision Making - 1602D-01 / Lab Unit 2 Assignment *Problem 4-30 Maverick Wings, Inc. manufactures airplanes for use in s At the end of 2013, Maverick's accountants developed th Budgeted overhead cost Estimated machine hours Estimated direct labor hours Estimated direct materials cost Maverick's inventory count, completed on December 31, Raw Materials Inventory Work in Process Inventory Finished Goods Inventory The company's 2014 payroll data revealed the following Job Title President and CEO Vice president and CFO Factory manager Assistant factory manager Machine operator Security guard, factory Materials handler Corporate secretary Janitor, factory The following information was taken from Maverick's Sc Plant Asset Factory building Administrative office What was Maveric Predetermined ove Warning Don't show me th Prepare the journal 1. 2. 3. 4. 5. 6. 7. 8. Prepare the approp Raw Materials Work in Process I Finished Goods In Manufacturing O Was manufacturing Overheads Warning Don't show me th Make the adjusting Account Title Warning Don't show me th If Maverick choose Sold for 2014? (Ro Work In Process Finished Goods Cost of Goods Sol Warning Don't show me th Job 3827 was start Using Maverick's Total Cost Sales Price Warning Don't show me th If Maverick had ch Predetermined rate Warning Don't show me th Question Attempts: 0 of 1 used Copyright 2000-2016 by John Wiley & Sons, Inc. or related companies. All rights reserved. Object 1 How can we help you? powered by Live Chat