Exercise 16-16 Santana Mortgage Company uses a process costing system to accumul
ID: 2532118 • Letter: E
Question
Exercise 16-16 Santana Mortgage Company uses a process costing 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, 180 2. Applications started in September, 920 3. Completed applications during September, 640 4. Applications still in process at September 30 were 100% complete as to materials forms) and 60% complete as to conversion costs. Beginning WIP $1,150 4,960 Direct materials Conversion costs September costs: Direct materials Direct labor Overhead $4,977 12,600 7,884 Process 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 Santana Mortgage Company uses the FIFO method. Also, assume that the applications in process on September 1 were 100% complete as to materials (forms) and 40% complete as to conversion costs.Explanation / Answer
Answers
Units
Material
Conversion Cost
Opening units
180
100%
40%
Introduced
920
Total
1100
Transferred
640
100%
100%
Closing WIP
460
100%
60%
Equivalent Units
WIP
Total Units
Material
Conversion cost
Opening
180
0%
0
60%
108
Ending
460
100%
460
60%
276
Introduced and completed
460
100%
460
100%
460
TOTAL Equivalent Units
1100
920
844
Material
Conversion Cost
Current cost
$4977
$20484
EUP
920
844
Cost/unit
$5.41
$24.27
Material
Conversion Cost
Cost/Unit
EUP
Cost allocated
EUP
Cost allocated
Opening
5.41
0
0
24.27
108
2621
Ending
5.41
460
2488.6
24.27
276
6699
Introduced and completed
5.41
460
2488.6
24.27
460
11164
TOTAL
A
4977
B
20484
Total Cost accounted for
(A+B)
25461
ANswer as asked , based on above total:
Units
Material
Conversion Cost
Opening units
180
100%
40%
Introduced
920
Total
1100
Transferred
640
100%
100%
Closing WIP
460
100%
60%
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