Using the data in E4-30, assume Hi-Tech Mortgage Company uses the FIFO method. Also assume that the applications in process on September 1 were 100% complete in terms of materials (forms) and 40% complete in terms of conversion costs.
In E4-30,
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
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.