Hi-Tech Mortgage Company uses a process costing system to accumulate costs in its loan 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, 900

4. Applications still in process at September 30 were 100% complete in terms of materials (forms) and 60% complete in terms of conversion costs.

Beginning work in process:

Direct materials ..............................$ 1,000

Conversion costs ............................. 4,000

September costs:

Direct materials .............................. $4,500

Direct labour ................................. 12,000

Overhead ..................................... 8,480

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.

Instructions

(a) Determine the equivalent units of service (production) for materials and conversion costs.

(b) Calculate the unit costs and prepare a cost reconciliation schedule.