Santana Mortgage Company uses a process cost system to accumulate costs in its A

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, 180 2. Applications started in September, 920 3. Completed applications during September, 640 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 $1,410 4,300 September costs: Direct materials Direct labor Overhead $4,596 12,240 7,926 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) Compute the unit cost. (Round unit costs to 2 decimal places, e.g. 2.25.) Materials Conversion Costs Unit costs s

Explanation / Answer

1) Application at end = 180+920 -640 = 460 Material Conversion Cost 1 Application completed 640 640 2 Ending application 460 276            [460*.60] 3 Equivalent units(1+2) (1st question) 1100 916 4 Total cost 1410+4596=6006 4300+12240+7926=24466 5 Cost per equivalent unit (Second Question)(4/3) $ 5.46   [6006/1100] $ 26.71    [24466/916] Costs accounted for: Transferred out [5.46+26.71] = 32.17*640 = $ 20588.8 20588.8 Ending work in process Material (5.46*460) 2511.6 Conversion cost (26.71*276) 7371.96 9883.56 Total costs 30472.36 Total Cost Incurred 1410+4300+4596+12240+7926=30472

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