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, 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 $1,250     Conversion costs 4,130 September costs:     Direct materials $5,020     Direct labor 12,720     Overhead 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.

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 0 decimal places, e.g. 1,225.) Costs accounted for: Transferred out $ Work in process, September 30    Materials $    Conversion costs Total costs $

Answer 1

Equivalent units:

	Materials	Conversion costs
Units transferred out [200+900-600]	500	500
Work-in process, September 30
[600 x 100%]	600
[600 x 60%]		360
The equivalent units of service (production)	1100	860

Unit Costs:

	Materials	Conversion costs	Total
Beginning WIP	$1,250	$4,130
Starting during the September	$5,020	$19,990
Total costs	$6,270	$24,120	$30,390
÷ Equivalent units	1,100	860
Unit costs	$5.70	$28.05	$33.75

Costs accounted for:

Costs accounted for:
Transferred out [500 x $33.75]	$16,875
Work in process, September 30
Materials [600 x $5.70]	$3,420
Conversion costs [360 x $28.05]	$10,098
Total Costs	$30,393