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. 2. 3. Applications in process on September 1, 200 Applications started in September, 900 Completed applications during September, 600 Applications still in process at September 30 were 100% complete as to materials (forms) and 60% complete as to conversion costs. 4. $1,250 4,130 Beginning WIP: Direct materials Conversion costs September costs: Direct materials Direct labor Overhead $5,020 12,720 7,270 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

1 The Equivalent units of Production Materials 1,100 Conversion Costs 900 N Materials Conversion Costs 5.70$ 26.80 Unit Costs $ $ 19,500 3 Costs accounted for: Transferred out Work in Process, September 30 Materials Conversion Costs Total Costs $ $ 2,850 8,040 $ $ 10,890 30,390

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Workings:

1 Weighted Average Method-Equivalent production Costs charged to production: Cost of Beginning WIP Cost added to production during the period Total Cost to be accounted for: Total costs accountred for * Difference due to rounding cost/unit $ 5,380 $ 25,010 $ 30,390 $ 30,390 0 Unit Reconcilation Beginning Work in Process Inventory, Started this period Units Charged to account for: Completed and Transferred out Ending Work in Process Inventory, Total units accounted for: 200 900 1,100 600 500 1,100 Equivalent units of production a. Completed and Transferred out Ending WIP Total Equiavlent units Units 600 500 1,100 % of Material EUP-Material %Conversion 100% 600 100% 100% 500 60% 1,100 EUP -Conversion 600 300 900

Cost per Equivalent unit of production b. Beginning WIP Started Total Costs Div, Equivalent units Cost per Equivalent unit of production 200 900 1,100 EUP-Material $ 1,250 $ 5,020 $ 6,270 1,100 $ 5.70 EUP -Conversion $ 4,130 $ 19,990 $ 24,120 900 $ 26.80 $ 32.50 Costs EUP Costs EUP Total costs accounted for: c. Cost of units transferred out: Direct Material Conversion cost EUP Cost per EUP Total costs 600 $ 5.70 $ 3,420 600 $ 26.80$ 16,080 $ 19,500 Cost of Ending WIP: d. Direct Material Conversion cost EUP Cost per EUP Total costs 500 $ 5.70 $ 2,850 300 $ 26.80 $ 8,040 $ $ 10,890 30,390 Total costs accounted for Cost Reconcilation e. Costs to be accounted for: Cost of beginning WIP Cost added to production during the period Total Cost to be accounted for: Costs accounted for as follow: Costs of units transferred out Cost of Ending WIP Total Cost to be accounted for: $ 5,380 $ 25,010 $ 30,390 $ 19,500 $ 10,890 $ 30,390

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