Waterway Wings, Inc. manufactures airplanes for use in stunt shows. Waterway'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), Waterway uses a job order costing system to accumulate product costs. At the end of 2020, Waterway's accountants developed the following expectations for 2021 based on the marketing department's sales forecast: $1,050,000 50,000 Budgeted overhead cost Estimated machine hours Estimated direct labor hours Estimated direct materials cost 9.000 $1,500,000 Waterway's inventory count, completed on December 31, 2020, revealed the following ending inventory balances: Raw Materials Inventory Work in Process Inventory Finished Goods inventory $251,000 $625,000 $3.230,000 The company's 2021 payroll data revealed the following actual payroll costs for the year Number Wage Rate Employed per Hour 1 Annual Salary per Employee $224,000 Total Hours Worked per Employee Job Title President and CEO Vice president and CFO Factory manager 1 $178,000 $40.700 Assistant factory manager 1 $30.800 Machine operator 5 $15 2,250 Security guard. Factory 2 $20,600 The company's 2021 payroll data revealed the following actual payroll costs for the year. Annual Total Hours Number Wage Rate Salary per Worked per Employed per Hour Employee Employee 1 $224.000 1 $178,000 1 $40,700 $30,800 1 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 5 $15 2.250 2 $20,600 2 $8 2.000 1 $36,000 2 $6 2.150 The following information was taken from Waterway'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 2020 all paid in cash included: Cost Factory insurance (fully expired) Administrative office utilities Amount $12.300 $5,500 Cost Amount 512,300 $5.500 Factory insurance (fully expired) Administrative office utilities Factory utilities Office supplies (fully consumed) 531,300 $4,200 Additional information about Waterway's operations in 2020 includes the following Raw materials purchases for the year amounted to $1.950.000. All materials were purchased on account The company used 51.870.000 in raw materials during the year. Of that amount, 85% was direct materials and 15% was indirect materials. Waterway 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 Waterway 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 Waterway's predetermined overhead rate in 20217 Predetermined overhead rate 70 of direct materials cost e Textbook and Media List of Accounts Prepare the journal entries to record Waterway'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 decimal places, eg. 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) 22 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) DIILIT II DID IT TO 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) 5. Manufacturing Overhead Accumulated Depreciation (To record depreciation on factory building and equipment) 6. Supplies Expense Utilities Expense Cash (To record administrative office utilities and office supplies expense) 7. Manufacturing Overhead cash (To record factory insurance and factory utilities) I UTLENIANI LA 8. Raw Materials inventory Accounts Payable (To record raw materials purchases) 9. Work in Process Inventory Manufacturing Overhead Raw Materials inventory (To record direct materials and indirect materials used in production) 10. Work in Process Inventory Manufacturine Overhead Question 10 of 10 0.21/1 E Raw Materials Inventory (To record direct materials and indirect materials used in production) 10. Work in Process inventory Manufacturing Overhead (To apply overhead to work in process) 11. Finished Goods Inventory Work in Process Inventory (To record transfer of completed airplanes) LINIC III 12 Accounts Receivable Sales Revenue (To record sale of airplanes to customers) 13 Cost of Goods Sold Finished Goods Inventory (To record cost of airplanes sold) eTextbook and Media List of Accounts Save for Later Attempts: unlimited Submit