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, 1,000 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. $1,200 4,860 Beginning WIP Direct materials Conversion costs September costs: Direct materials Direct labor Overhead $5,160 13,100 8,140 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)

Answer 1

	Beginning work in process			200	completed & transferred			700
	started during the year			1,000	ending work in process			500
	units to be accounted			1200	units accounted for			1200
1)	Equivalent units					EUP-		EUP-
				units	%-materials	materials	%-CC	Conversion
	completed & transferred			700	100%	700	100%	700
	ending work in process			500	100%	500	60%	300
	Equivalent units					1200		1000
					Materials	Conversion costs
	the equivalent units of service(production)				1200	1000
2)	unit costs
					Materials	CC	Total cost
	Beginning cost in WIP				1,200	4,860	6,060
	cost added during the year				5,160	21240	26,400
	total cost				6,360	26,100	32,460
	Equivalent units				1200	1000
	units cost				5.3	26.1	31.4
					Materials	CC
	Unit costs				5.3	26.1
3)	Cost accounted for
	Transferred out					21980
	Work in process,September 30
	Materials				2650
	Conversion costs				7830	10480
	Total costs					32460