Problem 4-32 (Part Level Submission) Sunland Wings, Inc. manufactures airplanes for use in stunt shows. Sunland'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), Sunland uses a job order costing system to accumulate product costs. At the end of 2016, Sunland's accountants developed the following expectations for 2017 based on the marketing department's sales forecast: Budgeted overhead cost Estimated machine hours Estimated direct labor hours Estimated direct materials cost $1,125,000 47,000 10,000 $1,500,000 Sunland's inventory count, completed on December 31, 2016, revealed the following ending inventory balances: Raw Materials Inventory Work in Process Inventory Finished Goods Inventory $249,000 $625,000 $1,560,000 The company's 2017 payroll data revealed the following actual payroll costs for the year: Job Title President and CEO Vice president and CFO Factory manager Assistant factory manager Machine operator Security guard, factory Forklift operator Corporate secretary Janitor, factory Annual Total Hours Number Wage Rate Salary per Worked per Employed per Hour Employee Employee $222,000 $177,000 $40,500 $31,600 $14.5 2,250 $20,800 2,000 $36,300 2,150 $7.5 $6 The following information was taken from Sunland's Schedule of Plant Assets. All assets are depreciated using the straight-line method. Plant Asset Factory building Administrative office Factory equipment Purchase Price Salvage Value Useful Life $4,000,000 $150,000 20 Years $650,000 $125,000 30 Years $2,000,000 $20,000 12 Years Other miscellaneous costs for 2017 all paid in cash included: Cost Factory insurance (fully expired) Administrative office utilities Factory utilities Office supplies (fully consumed) Amount $13,300 $5,900 $32,800 $5,000 Additional information about Sunland's operations in 2017 includes the following: Raw materials purchases for the year amounted to $1,949,000. 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. Sunland 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. Sunland 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.) (a) Your answer is correct. What was Sunland's predetermined overhead rate in 2017? (Round answer to 2 decimal places, e.g. 52.75%.) Predetermined overhead rate % of direct materials cost Click if you would like to Show Work for this question: Open Show Work Prepare the journal entries to record Sunland's costs for 2017. (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, e.g. 5,275.) No. Account Titles and Explanation Debit Credit 1. Salaries and Wages Expense 435300T Salaries Payable 435300 (To record salaries for president, vice president, and corpoarte secretary) 2. Manufacturing Overhead 113700 Salaries Payable 113700 (To record salaried factory worker costs) 3. Work in Process Inventory 125 Manufacturing Overhead 55800 T T Wages Payable 18925 (To record hourly factory worker costs) 4. TDepreciation Expense 7500 Accumulated Depreciation 17500 (To record depreciation on administrative office equipment) 5. TManufacturing Overhead 357500 Accumulated Depreciation 357500 (To record depreciation on factory building and equipment) 6. Office Utilities 5900 Office Supplies 5000 0900 TCash (To record administrative office utilities and office supplies expense) 7. Manufacturing Overhead 46100 Cash 46100 (To record factory insurance and factory utilities) 8. Raw Materials Inventory 19000 Accounts Payable 49000 (To record raw materials purchases) Work in Process Inventory 1581000 Manufacturing Overhead 279000 Raw Materials Inventory 1860000 (To record direct materials and indirect materials used in production) 10. Work in Process Inventory 750 Manufacturing Overhead 85750 (To apply overhead to work in process) 11. Finished Goods Inventory 3450000 Work in Process Inventory 3450000 (To record transfer of completed airplanes) FOTOUUT LIIDIDUOTIPIOLO PICIOD 12. Taccounts Receivable 6570000 Sales Revenue venue T 6570000 (To record sale of airplanes to customers) 13. Cost of Goods Sold 50000 3650000 T Finished Goods Inventory (To record cost of airplanes sold) 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 Sunland's transactions for 2017. (Post entries in order presented in the problem. Round answers to O decimal places, e.g. 5,275.) Raw Materials Bal. 249000 T(8) IT 1949000 T(9) IT 1860000 Bal. V Work in Process Inventory Bal. Bal. 625000 .63125 3450000 T(9) DI 1581000 1581000 7(10) 1185750 T Bal 7 Finished Goods Inventory Bal. 1560000 7(11) T 3450000 T (13) 3650000 Bal. Manufacturing Overhead 113700 1185750 55800 T(3) 15 55800T 357500 357500 79000 UILD Cost of Goods Sold Tian | 350cm) 3650000 Sales Revenue IND [12), 657000 (d) Your answer is correct. Was manufacturing under- or overapplied in 2017? By how much? (Round answer to 0 decimal places, e.g. 5,275.) Overapplied Overheads 333650 Click if you would like to Show Work for this question: Open Show Work 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 O decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit Manufacturing Overhead 33650 Cost of Goods Sold 333650 Click if you would like to Show Work for this question: Open Show Work If Sunland 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.) Adjusted Balance Work In Process Finished Goods A Cost of Goods Sold A