Problem 4-32 (Part Level Submission) Waterway uses a markup of 80% to price its

Question

Problem 4-32 (Part Level Submission)

Waterway 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.)

Problem 4-32 (Part Level Submission)

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 2016, Waterway’s accountants developed the following expectations for 2017 based on the marketing department’s sales forecast: Budgeted overhead cost $1,099,000 Estimated machine hours 41,000 Estimated direct labor hours 12,000 Estimated direct materials cost $1,520,000
Waterway’s inventory count, completed on December 31, 2016, revealed the following ending inventory balances: Raw Materials Inventory $249,000 Work in Process Inventory $625,000 Finished Goods Inventory $3,350,000
The company’s 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 $227,000 Vice president and CFO 1 $178,000 Factory manager 1 $40,200 Assistant factory manager 1 $31,500 Machine operator 5 $14.5 2,250 Security guard, factory 2 $20,300 Forklift operator 2 $7.5 2,000 Corporate secretary 1 $36,200 Janitor, factory 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 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) $12,100 Administrative office utilities $5,500 Factory utilities $32,500 Office supplies (fully consumed) $4,800
Additional information about Waterway’s operations in 2017 includes the following: • Raw materials purchases for the year amounted to $1,948,000. 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. • 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 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.)

Your answer is partially correct. Try again. 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 Waterway’s transactions for 2017. (Post entries in order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.) Raw Materials

Explanation / Answer

Raw Materials :

Work in Process Inventory

Finished Goods Inventory

Cost of Goods Sold

Manufacturing Overhead Control

Sales:

Beginning balance 249,000 Work in Process Inventory 1,581,000 Accounts Payable 1,948,000 Manufacturing Overhead 279,000 Ending balance 337,000

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