Santana Mortgage Comapny uses a process costing system to accumulate cost in its
ID: 2419200 • Letter: S
Question
Santana Mortgage Comapny uses a process costing system to accumulate cost in its Application Department. When an application is completed, it is fowarded to the Loan Department for final processing. The folowing processing and cost data pertain to September.
1. Applications in process on Sept 1, 100
2.Application started in Sept, 900
3. Completed applications during Sept, 700
4. Applications still in process at Sept 30 were 100% complete as to materials (forms) and 60% complete as to conversion costs.
Beg Work in Process:
Direct materials $1100
Conversion costs 4060
Sept Costs:
Direct materials $4050
Direct Labor 12100
Overhead 8060
Material 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.
Santana Mortgage Company uses the FIFO method. Also, assume that the applications in process on Sept 1 were 100% complete as to materials (forms) and 40% complete as to conversion costs.
The equivalent units of service (production) Materials Conversion Cost
? ?
Compute the unit costs (unit cost) Materials Conversion Cost
? ?
Prepare a cost reconciliation schedule
Cost accounted for:
WIP, Sept 1 ?
Conversion cost ? ?
Started and completed ? ?
WIP, Sept 30:
Materials ?
Conversion cost ? ?
Total cost ?
Explanation / Answer
Application in process 100 Application started 900 Application complete -700 300 The equivalent of services Material Cost 300 unit 1100 + 60% of 4060 3536 Unit cost Material Cost 300 unit 11.78667
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