Please solve part A and show how solution was obtained. Hot Wings, Inc. manufact
ID: 2588789 • Letter: P
Question
Please solve part A and show how solution was obtained.
Hot Wings, Inc. manufactures airplanes for use in stunt sing 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), Hot uses a job order costing system to accumulate product costs. Hot's factory is highly automat the end of 2016, Hot's accountants developed the following expectations for 2017 based on the Estimated machine hours Estimated direct labor hours Estimated direct materials cost $1,079,000 47,000 12,000 $1,520,000 Hot's inventory count, completed on December 31, 2016, revealed the following ending inventory Raw Materials Inventory $249,000 Work in Process Inventory 626,000 Finished Goods Inventory $1,810,000 e company's 2017 payroll data revealed the following actual payroll costs for the year: Number Employe Rate Wage Hours per Job Title $224,000 $178,000 $40,700 $30,300 ce president and CFO manager sistant factory $14 250 2,000 2,150 Machine operator Security guard, fa $20,700 klift operator ate secreta $36,700 anitor, facto $6 following information was taken from Hot's Schedule of Plant Assets. All assets are depreciated Plant Asset Life 150,000 20 Years $125,000 30 Years $4,000,000 $650,000 Factory equipment $2,000,000 er miscellaneous costs for 2017 all paid in cash included: Amourn Cost xpired) $5,900 $31,000 ce supplies (fully consumed) $5,600 dditional information about Hot's operations in 2017 includes the following Raw materials purchases for the year amounted to $1,949,000. All materials were pu on The company used $1,860,000 in raw materials during the year. Of that amount, 85% was direct materials and 15% was indirect materials. Hot 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 Hot uses a markup of 80% to price its airplanes. Sales for the year were $6,570,000. All sales are made on account What was Hot's predetermined overhead rate in 2017? (Round answer to 2 decimal places, e.g. 52.75%.) % of direct materials costExplanation / Answer
a Predetermined overhead rate = 1079000/1520000= 70.99%