Santana Mortgage Company uses a process cost system to accumulate costs in its A
ID: 2332676 • Letter: S
Question
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.
Materials are the forms used in the application process, and these costs are incurred at the beginning of the process. Conversion costs are incurred uniformly during the process.
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.)
Costs accounted for:
Transferred out
Work in process, September 30
Materials
Conversion costs
Total costs
1. Applications in process on September 1, 200 2. Applications started in September, 1,000 3. Completed applications during September, 700 4. Applications still in process at September 30 were 100% complete as to materials (forms) and 60% complete as to conversion costs.Explanation / Answer
Answer
Units Reconciliation
Units to account for:
Beginning WIP
200
Units started this period
1,000
Total Units to account for
$ 1,200.00
Total Units accounted for:
Completed & Transferred out
700
Ending WIP
500
Total Units accounted for
$ 1,200.00
EUP - Weighted Average Method
Units
% Material
EUP Materials
% Conversion
EUP - Conversion
Units TRANSFERRED
700
100%
700
100%
700
Units of ENDING WIP
500
100%
500
60%
300
Equivalent Units of Production
1,200
1,000
COST per EUP
Material
Conversion
Cost of Beginning WIP
$ 1,240.00
$ 4,820.00
Cost incurred during the period
$ 5,120.00
$ 21,380.00
Total Costs
Costs
$ 6,360.00
Costs
$ 26,200.00
Equivalent units of production
EUP
1,200
EUP
1,000
Cost per EUP
$ 5.30
$ 26.20
Costs accounted for:
Transferred out
[700 units x ($5.30 + $ 26.20)
$ 22,050.00
Work in process, September 30
Materials [500 units x $5.30]
$ 2,650.00
Conversion costs [300 units x $26.20]
$ 7,860.00
$ 10,510.00
Total costs
$ 32,560.00
Units Reconciliation
Units to account for:
Beginning WIP
200
Units started this period
1,000
Total Units to account for
$ 1,200.00
Total Units accounted for:
Completed & Transferred out
700
Ending WIP
500
Total Units accounted for
$ 1,200.00
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