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, 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. UC Loo Beginning WIP: Direct materials $1,440 Conversion costs 4,580 September costs: Direct materials $5,160 Direct labor 12,690 Overhead 6,760 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. (a) Determine the equivalent units of service (production) for materials and conversion costs. Materials Conversion Costs The equivalent units of service (production) (61) Compute the unit cost. (Round unit costs to 2 decimal places, e.g. 2.25.) Materials Conversion Costs Unit costs $ (62) 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 P ol ni ht $ Conversion costs Total costs

Answer 1

Requirements:

Particulars	Material	Convetsion costs
Equivalent units of service	1100	900
Unit cost	$6	$26.7

Cost reconciliation:

Total cost:30630

(a) Determination of the equivalent units of service(Production)

Particulars	Material	Conversion
Completed applications	600	600
Ending work in process Materials:[500*100%] Conversion costs:[500*60%]	500	300
Equivalent units of service	1100	900

(b) Computation of the unit cost

Particulars	Material	Conversion
A) Beginning WIP	1440	4580
B) September Costs Materias:Direct material Conversion costs:(direct labor+overhead)	5160	19450 {12690+6760}
C) Total costs	6600	24030
D) Equivalent units of service	1100	900
E) Unit costs	$6	$26.7

(c) Preparation of a Cost reconciliation Schedule

Particulars	Amount($)	Amount($)
Cost accounted for:
Transferred out {completed applications* unit costs} i.e., [600*(6+26.7) ]		19620
Work in process,September 30
Materials{500*6}	3000
Conversion costs{300*26.7}	8010	11010
Total costs		30630

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