Problem 4-32

Oriole Wings, Inc. manufactures airplanes for use in stunt shows. Orioles 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), Oriole uses a job order costing system to accumulate product costs. At the end of 2016, Orioles accountants developed the following expectations for 2017 based on the marketing departments sales forecast:

Budgeted overhead cost		$1,054,000
Estimated machine hours		53,000
Estimated direct labor hours		11,000
Estimated direct materials cost		$1,510,000

Orioles inventory count, completed on December 31, 2016, revealed the following ending inventory balances:

Raw Materials Inventory		$251,000
Work in Process Inventory		$627,000
Finished Goods Inventory		$2,360,000

The companys 2017 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				$228,000
Vice president and CFO		1				$178,000
Factory manager		1				$40,300
Assistant factory manager		1				$33,300
Machine operator		5		$14.5				2,250
Security guard, factory		2				$20,100
Forklift operator		2		$7.5				2,000
Corporate secretary		1				$36,000
Janitor, factory		2		$6				2,150

The following information was taken from Orioles 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 2017 all paid in cash included:

Cost		Amount
Factory insurance (fully expired)		$13,600
Administrative office utilities		$5,200
Factory utilities		$30,000
Office supplies (fully consumed)		$4,800

Additional information about Orioles operations in 2017 includes the following:

	Raw materials purchases for the year amounted to $1,950,000. All materials were purchased 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.
	Oriole 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.
	Oriole uses a markup of 80% to price its airplanes. Sales for the year were $6,570,000. All sales are made on account. (Note: This transaction requires two journal entries.) I completed all journal entries and do not need help with this section. Below are the only questions I need assistance with. If Oriole chooses instead to prorate under- or overapplied overhead, what are the adjusted Work in Process Inventory, Finished Goods Inventory and Cost of Goods Sold account balances for 2017? (Round % of total to 2 decimal places, e.g. 55.75 and final answers to 0 decimal places, e.g. 5,275.) Work in Process: Finished Goods: Cost of goods sold: Job 3827 was started and completed in 2017. The job required 600 machine hours, 700 direct labor hours, and $80,000 in direct materials to complete. What was the total cost of this job? Using Orioles 80% markup, what sales price would be charged for this airplane? (Round answers to 0 decimal places, e.g. 5,275.) Total Cost: Sales Price: If Oriole had chosen to use machine hours as its overhead application base, what would the rate have been in 2017? (Round answer to 2 decimal places, e.g. 52.75.) Predetermined rate: $ ? / Machine Hour