Santana Mortgage Company uses a process cost system to accumulate costs in its A

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. 1. Applications in process on September 1, 110 2. Applications started in September, 980 3. Completed applications during September, 770 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 Conversion costs $1,400 4,250 September costs: Direct materials Direct labor Overhead 12,680 8,120 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 p Determine the equivalent units of service (production) for materials and conversion costs. aterials Conversion Costs The equivalent units of service (production)

Explanation / Answer

Details Units % Material Equivalent Units of Service -Materials % Conversion Equivalent Units of Service -Conversion Applications Completed                                  770 100%                   770 100%                       770 Applications in Process Sep 30                                320 100%                   320 60%                       192 Total Equivalent Units of service                1,090                       962 Cost Calculation Materials Conversion Total Beginning WIP                      1,400.00            4,250.00                5,650 Incurred in Sep                      4,693.00         20,800.00             25,493 Total Cost                      6,093.00         25,050.00             31,143 Total Equivalent Units of service                      1,090.00               962.00 Cost per Equivalent units of service= $                          5.59 $             26.04 Cost Reconciliation Transferred Out   Materials Conversion Total Total Equivalent Units of service                                770                     770 Cost per Equivalent units of service= $                          5.59 $             26.04 Total Cost   $                  4,304.23 $     20,050.42 $   24,354.65 Closing WIP Sep 30. Materials Conversion Total Total Equivalent Units of service                                320                     192 Cost per Equivalent units of service= $                          5.59 $             26.04 Total Cost                              1,789                  5,000                6,788 Total Cost Accounted for             31,143

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