Determine the equivalent units of service

Reference no: EM131105976

E3-15 Royale Mortgage Company uses a process cost 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	Beginning WIP:
September 1, 100	Direct materials	$ 1,000
2. Applications started in	Conversion costs	3,960
September, 900	September costs:
3. Completed applications during	Direct materials	$ 4,500
September, 800	Direct labor	12,000
4. Applications still in process at	Overhead	9,340

September 30 were 100% complete as to materials (forms) and 60% complete as to conversion costs.

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.

Reference no: EM131105976

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