Swifty Wings, Inc. manufactures airplanes for use in stunt shows. Swifty'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), Swifty uses a job order costing system to accumulate product costs. At the end of 2020, Swifty's accountants developed the following expectations for 2021 based on the marketing department's sales forecast: Budgeted overhead cost $1,050,000 50,000 Estimated machine hours Estimated direct labor hours 8,000 Estimated direct materials cost $1,500,000 Swifty's inventory count, completed on December 31, 2020, revealed the following ending inventory balances: Raw Materials Inventory $250,000 Work in Process Inventory $625,000 Finished Goods Inventory $1,440,000 The company's 2021 payroll data revealed the following actual payroll costs for the year: Number Employed Wage Rate per Hour Annual Salary per Employee Total Hours Worked per Employee Job Title President and CEO 1 $228,000 Vice president and CFO 1 $178,000 Factory manager 1 $40,100 Assistant factory manager 1 $33,700 Machine operator 5 $15 2.250 N $20,400 Security guard, factory Forklift operator Corporate secretary N $8 2.000 1 $35,500 Janitor, factory 2 $6 2,150 The following information was taken from Swifty'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 2020 all paid in cash included: Cost Amount Factory insurance (fully expired) $13,300 Administrative office utilities $5,200 Factory utilities $31,100 Office supplies (fully consumed) $5,600 Additional information about Swifty's operations in 2020 includes the following: Raw materials purchases for the year amounted to $1,947,000. 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. Swifty 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. Swifty uses a markup of 150% 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 Swifty's predetermined overhead rate in 2021? Predetermined overhead rate 70 % of direct materials cost Prepare the journal entries to record Swifty's costs for 2021. (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. 5,275.) No. Account Titles and Explanation Debit Credit 1. Salaries and Wages Expense Salaries Payable (To record salaries for president, vice president, and corporate secretary) 2. Manufacturing Overhead Salaries Payable (To record salaried factory worker costs) 3. Work in Process Inventory Manufacturing Overhead Wages Payable (To record hourly factory worker costs) 4. Depreciation Expense Accumulated Depreciation (To record depreciation on administrative office equipment) 5. Manufacturing Overhead Accumulated Depreciation (To record depreciation on factory building and equipment) 6. Utilities Expense 5200 Supplies Expense 5600 Cash 10800 (To record administrative office utilities and office supplies expense) 7. Manufacturing Overhead Cash (To record factory insurance and factory utilities) 8. Raw Materials Inventory 1947000 Accounts Payable 1947000 (To record raw materials purchases) 9. Manufacturing Overhead 279000 Work in Process Inventory 1581000 Raw Materials Inventory 1860000 (To record direct materials and indirect materials used in production) 10. Work in Process Inventory IN Manufacturing Overhead (To apply overhead to work in process) 11. Finished Goods Inventory 3450000 Work in Process Inventory 3450000 (To record transfer of completed airplanes) 12. Accounts Receivable 6570000 Sales Revenue 6570000 (To record sale of airplanes to customers) 13. Cost of Goods Sold Finished Goods Inventory (To record cost of airplanes sold)