Santana Mortgage Company uses a process costing 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, 1802.Applications started in September, 9703.Completed applications during September, 6904.Applications still in process at September 30 were 100% complete to materials (forms) and 60% complete to conversion costs.
Beginning WIP: Direct materials$1,440 Conversion costs4,860September costs: Direct materials$4,811 Direct labor12,700 Overhead9,087
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.
Santana Mortgage Company uses the FIFO method. Also, assume that the applications in process on September 1 were 100% complete to materials (forms) and 40% complete to conversion costs.
a) Determine the equivalent units of service (production) for materials and conversion costs.
b) Compute the unit costs.
c) make cost reconciliation schedule.