Using the data in E3-15, assume Santana 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. Assume overhead costs were $9,620 instead of $9,520.

In E3-15

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.

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

1. Applications in process on 2. Applications started in 3. Completed applications during 4. Applications still in process at Beginning WIP: 1,000 3,960 September 1: 100. September: 1,000 September: 800. Direct materials Conversion costs September costs: Direct materials Direct labor Overhead 4,500 12,000 9,520 September 30:100% complete as to materials (forms) and 60% complete as to conversion costs.