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Maverick Wings, Inc. manufactures airplanes for use in stunt shows. Mavericks 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, Mavericks accountants developed the following expectations for 2014 based on the marketing departments sales forecast: Budgeted overhead cost $1,141,000 Estimated machine hours 46,000 Estimated direct labor hours 8,000 Estimated direct materials cost $1,510,000 Mavericks inventory count, completed on December 31, 2013, revealed the following ending inventory balances: Raw Materials Inventory $251,000 Work in Process Inventory $625,000 Finished Goods Inventory $1,590,000 The companys 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 $225,000 Vice president and CFO 1 $177,000 Factory manager 1 $40,600 Assistant factory manager 1 $32,200 Machine operator 5 $14.50 2,250 Security guard, factory 2 $20,100 Materials handler 2 $7.50 2,000 Corporate secretary 1 $36,900 Janitor, factory 2 $6 2,150 The following information was taken from Mavericks 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 2014 all paid in cash included: Cost Amount Factory insurance $12,800 Administrative office utilities $5,300 Factory utilities $31,800 Office supplies $4,100 Additional information about Mavericks operations in 2014 includes the following: Raw materials purchases for the year amounted to $1,945,000. All purchases were 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. 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 Mavericks predetermined overhead rate in 2014? (Round answer to 2 decimal places, e.g. 2.45%.) Predetermined overhead rate % of direct materials cost Show List of Accounts

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 Mavericks transactions for 2014. (Post entries in order presented in the problem. Round answers to 0 decimal places, e.g. 345,000.)

Raw Materials

Work in Process Inventory

Finished Goods Inventory

Manufacturing Overhead

Cost of Goods Sold

Sales Revenue

Show List of Accounts Link to Text

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

by $ Show List of Accounts Link to Text

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 Show List of Accounts Link to Text

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