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.)

Homework Answers

Answer #1
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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