Using the data in E16-15, assume Royale Mortgage Company uses the FIFO method. Also assume that the applications in process on September 1 were 100% complete as to materials (forms) and 40% complete as to conversion costs.

Instructions

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

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

Data from E16-15

Beginning WIP: Direct materials Conversion costs September costs: Direct materials Direct labor Overhead 1. Applications in process on September 1, 100 2. Applications started in $ 1,000 3,960 September, 900 3. Completed applications during September, 800 4. Applications still in process at September 30 were 100% complete as to materials (forms) and 60% complete as to conversion costs. $ 4,500 12,000 9,340