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, 100 2. Applications started in September, 900 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. $1,400 5,020 Beginning WIP: Direct materials Conversion costs September costs: Direct materials Direct labor Overhead $4,500 12.620 5,328 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. Determine the equivalent units of service (production) for materials and conversion costs. Materials Conversion Costs The equivalent units of service (production) LINK TO TEXT LINK TO TEXT Compute the unit cost. (Round unit costs to 2 decimal places, e.g. 2.25.) Materials Conversion Costs Unit costs LINK TO TEXT LINK TO TEXT Prepare a cost reconciliation schedule. (Round unit costs to 2 decimal places, e.g. 2.25 and final answers to o decimal places, e.g. 1,225.) Costs accounted for: Transferred out Work in process, September 30 Materials Conversion costs Total costs

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	1,000	880

.

	Material	Conversion
Unit cost	$                    5.90	$                 26.10

.

Costs accounted for:
Transferred out		$            22,400
Work in process, October 31
Materials	$           1,770
Conversion costs	$           4,698	$              6,468
Total costs		$            28,868

Working

Reconciliation of Units
A	Beginning WIP	100
B	Introduced	900
C=A+B	TOTAL	1,000
D	Transferred out	700
E=C-D	Ending WIP	300

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	700			100%	700	100%	700
Ending WIP	300			100%	300	60%	180
Total	1,000			Total	1,000	Total	880

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 1,400	$ 5,020	$ 6,420
Cost incurred during period		$ 4,500	$ 17,948	$ 22,448
Total Cost to be accounted for		$ 5,900	$ 22,968	$ 28,868
Total Equivalent Units		1,000	880
Cost per Equivalent Units		$                   5.90	$                   26.10	$             32.00

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 5.90	300	$             1,770.00	700	$            4,130.00
Conversion cost	$ 26.10	180	$             4,698.00	700	$          18,270.00
TOTAL	$ 28,868	TOTAL	$ 6,468	TOTAL	$ 22,400