Question

# Santana Mortgage Company uses a process cost system to accumulate costs in its Application Department. When...

Santana Mortgage Company uses a process cost system to accumulate costs in its Application Department. When an application is completed, it is forwarded to the Loan Department for final processing. The following processing and cost data pertain to September.

 1 Applications in process on September 1, 100 2 Applications started in September, 1,000 3 Completed applications during September, 800 4 Applications still in process at September 30 were 100% complete as to materials (forms) and 60% complete as to conversion costs.
 Beginning WIP: Direct materials \$1,140 Conversion costs 4,070 September costs: Direct materials \$5,460 Direct labor 12,960 Overhead 9,332

1)Determine the equivalent units of service (production) for materials and conversion costs.

2)Compute the unit cost. (Round unit costs to 2 decimal places, e.g. 2.25.)

3) Prepare a cost reconciliation schedule. (Round unit costs to 2 decimal places, e.g. 2.25 and final answers to 0 decimal places, e.g. 1,225.)

 1 Materials Conversion Costs Completed applications 800 800 Work in Process September 30 300 180 The equivalent units of service (production) 1100 980 2 Materials Conversion Costs Beginning WIP 1140 4070 September costs 5460 22292 Total costs 6600 26362 Divided by equivalent units of service 1100 980 Unit costs 6 26.9 3 Costs accounted for: Transferred out 26320 =800*(6+26.9) Work in process, September 30 Materials 1800 =300*6 Conversion costs 4842 6642 =180*26.9 Total costs 32962

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