a Materials Conversion Costs Santana Mortgage Company uses a

(a)

Materials

Conversion Costs

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, 160 2. Applications started in September, 990 3. Completed applications during September, 730 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 $1,210     Conversion costs 4,420 September costs:     Direct materials $4,977     Direct labor 12,280     Overhead 9,716 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.

Solution

Beginning work in process 160 completed & transferred 730 started during the year 990 ending work in process 420 units to be accounted 1150 units accounted for 1,150 Calculation of Equivalent units % mater materials % CC CC Completed & transferred 730 100% 730 100% 730 ending work in process 420 100% 420 60% 252 units accounted for 1,150 1150 982 Materials conversion Equivalents units of service 1,150 982