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Problem 1: 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. Application in process on September 1, 110
2. Application stated in September, 980
3. Completed applications during September, 770
4. Application still in process at September 30 were 100% complete as to materials (forms) and 60% complete as to conversion costs.
Beginning WIP:
Direct materials
$1,400
Conversion costs
4,250
September costs:
$4,693
Direct labor
12,680
Overhead
8,120
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.
1. Determine the equivalent units of service (Production) for materials and conversion costs.
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