Question

Exercise 3-15 (Part Level Submission) 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. $1,120 4,300 Beginning WIP: Direct materials Conversion costs September costs: Direct materials Direct labor Overhead $4,580 12,920 5,836 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

Solution

Costs accounted for:
Transferred out		$            22,330
Work in process, October 31
Materials	$           1,710
Conversion costs	$           4,716	$              6,426
Total costs		$            28,756

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
	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	TOTAL
Beginning WIP Inventory Cost (A)		$ 1,120	$ 4,300	$ 5,420
Cost incurred during period (B)		$ 4,580	$ 18,756	$ 23,336
Total Cost to be accounted for (C=A+B)		$ 5,700	$ 23,056	$ 28,756
Total Equivalent Units(D)		1,000	880
Cost per Equivalent Units (E=C/D)		$ 5.70	$ 26.20	$ 31.90

..

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 5.70	300	$             1,710.00	700	$            3,990.00
Conversion	$ 26.20	180	$             4,716.00	700	$          18,340.00
TOTAL	$ 28,756	TOTAL	$ 6,426	TOTAL	$ 22,330