Question

Exercise 3-15 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, 200 2. Applications started in September, 900 3. Completed applications during September, 600 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 $1,250 4,130 September costs: Direct materials Direct labor Overhead $5,020 12,720 7,270 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.

Answer 1

1
	Materials	Conversion costs
Completed applications	600	600
Ending work in process	500	300	=500*60%
The equivalent units of service(Production)	1100	900
2
	Materials	Conversion costs
Beginning WIP	1250	4130
September costs	5020	19990
Total costs	6270	24120
Divide by equivalent units of service	1100	900
Unit costs	5.70	26.80
3
Cost accounted for:
Transferred out		19500	=600*(5.7+26.8)
Work in Process, September 30:
Materials	2850		=500*5.7
Conversion costs	8040	10890	=300*26.8
Total costs		30390