PROBLEM 4-32 Coronado Wings, Inc.

Coronado Wings, Inc. manufactures airplanes for use in stunt shows. Coronado’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), Coronado uses a job order costing system to accumulate product costs.

At the end of 2016, Coronado’s accountants developed the following expectations for 2017 based on the marketing department’s sales forecast:

Budgeted overhead cost $1,101,000
Estimated machine hours 53,000
Estimated direct labor hours 9,000
Estimated direct materials cost $1,500,000

Coronado’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 $1,470,000

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 $228,000
Vice president and CFO 1 $178,000
Factory manager 1 $41,000
Assistant factory manager 1 $31,300
Machine operator 5 $14.5 2,250
Security guard, factory 2 $20,500
Forklift operator 2 $7.5 2,000
Corporate secretary 1 $36,200
Janitor, factory 2 $6 2,150

The following information was taken from Coronado’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) $14,000
Administrative office utilities $5,700
Factory utilities $32,000
Office supplies (fully consumed) $5,200

Additional information about Coronado’s operations in 2017 includes the following:

Raw materials purchases for the year amounted to $1,945,000. 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.
Coronado 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.
Coronado 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.)

Collapse question part

(a)

Incorrect answer. Your answer is incorrect. Try again.

What was Coronado’s predetermined overhead rate in 2017? (Round answer to 2 decimal places, e.g. 52.75%.)

Predetermined overhead rate Entry field with incorrect answer% of direct materials cost
Click if you would like to Show Work for this question:

Open Show Work

SHOW LIST OF ACCOUNTS

SHOW SOLUTION

LINK TO TEXT

LINK TO TEXT

LINK TO TEXT

LINK TO TEXT

LINK TO VIDEO

LINK TO VIDEO

Attempts: 2 of 2 used

Collapse question part

(b)

Prepare the journal entries to record Coronado’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 0 decimal places, e.g. 5,275.)

No.

Account Titles and Explanation

Debit

Credit

1.

(To record salaries for president, vice president, and corpoarte secretary)

2.

(To record salaried factory worker costs)

3.

(To record hourly factory worker costs)

4.

(To record depreciation on administrative office equipment)

5.

(To record depreciation on factory building and equipment)

6.

(To record administrative office utilities and office supplies expense)

7.

(To record factory insurance and factory utilities)

8.

(To record raw materials purchases)

9.

(To record direct materials and indirect materials used in production)

10.

(To apply overhead to work in process)

11.

(To record transfer of completed airplanes)

12.

(To record sale of airplanes to customers)

13.

(To record cost of airplanes sold)

Click if you would like to Show Work for this question:

Open Show Work

LINK TO TEXT

LINK TO TEXT

LINK TO TEXT

LINK TO TEXT

LINK TO VIDEO

LINK TO VIDEO

Attempts: 0 of 2 used

SAVE FOR LATER

SUBMIT ANSWER

Expand question part

(c)

The parts of this question must be completed in order. This part will be available when you complete the part above.

Expand question part

(d)

The parts of this question must be completed in order. This part will be available when you complete the part above.

Expand question part

(e)

The parts of this question must be completed in order. This part will be available when you complete the part above.

Expand question part

(f)

The parts of this question must be completed in order. This part will be available when you complete the part above.

Expand question part

(g)

The parts of this question must be completed in order. This part will be available when you complete the part above.

Expand question part

(h)

The parts of this question must be completed in order. This part will be available when you complete the part above.


>>
<<
What our clients say
Daphne Whitby
Daphne Whitby
My homework required that I use Java to produce a programming assignment. I’ve been running up and down with friends and workThank you for  your help 
Arnold M
Arnold M
This site did honor their end of the bargain. I have been searching for a college essay help services for a while, and finally, I found the best of the best.
Regina Smith
Regina Smith
I received my essay early this morning after I had placed an order last night. I was so amazed at how quickly they did my work. The most surprising thing is that I was not asked to pay for extra due to the short notice!! I am a happy student