Exercise 16-15 Santana Mortgage Company uses a process cost system to accumulate

Question

Exercise 16-15 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, 100 2. Applications started in September, 1,000 3. Completed applications during September, 800 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 $1,000 3,960 September costs: Direct materials Direct labor Overhead $4,500 12,000 Materials ere 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 oquivalent units of service (production) 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 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 Conversion costs Total costs Click if you would like to Show Work for this question:

Explanation / Answer

Whole units Equivalent units Material Conversion Beginning Applications 100 100 100 Applications Started and completed 700 700 700 Closing Inventory 300 300 180 1 Equivalent units of Service (production) 1100 1100 980 Calculation of cost per equivalent units Material Conversion Costs incurred 5500 25480 Units of equivalent production 1100 980 2 Unit costs 5 26 Costs accounted for Transferred out 24800 Work in Process, September 30 Materials 1500 Conversion costs 4680 Total costs

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