Crane Wings, Inc. manufactures airplanes for use in stunt shows. Crane’s factory is highly automated, using the latest in robotic technology.

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

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

Budgeted overhead cost$1,121,000Estimated machine hours54,000Estimated direct labor hours11,000Estimated direct materials cost$1,510,000

Crane’s inventory count, completed on December 31, 2016, revealed the following ending inventory balances:

Raw Materials Inventory$251,000Work in Process Inventory$626,000Finished Goods Inventory$2,240,000

The company’s 2017 payroll data revealed the following actual payroll costs for the year:

Job TitleNumber 

EmployedWage Rate 

per HourAnnual 

Salary per 

EmployeeTotal Hours 

Worked per

EmployeePresident and CEO1$223,000Vice president and CFO1$177,000Factory manager1$40,000Assistant factory manager1$33,500Machine operator5$14.52,250Security guard, factory

2$20,400Forklift operator2$7.52,000Corporate secretary1$35,200Janitor, factory2$62,150

The following information was taken from Crane’s Schedule of Plant Assets. All assets are depreciated using the straight-line method.

Plant AssetPurchase PriceSalvage ValueUseful LifeFactory building$4,000,000$150,00020 YearsAdministrative office$650,000$125,00030 YearsFactory equipment$2,000,000$20,00012 Years

Other miscellaneous costs for 2017 all paid in cash included:

CostAmountFactory insurance (fully expired)$13,800Administrative office utilities$5,000Factory utilities$30,800Office supplies (fully consumed)$4,600

Additional information about Crane’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 $1,870,000 in raw materials during the year. Of that amount, 85% was direct materials and 15% was indirect materials.•Crane 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.•Crane 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.)

Prepare the journal entries to record Crane’s costs for 2017. (Use Salaries Payable and Wages Payable accounts for payroll costs.

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