Question

Question 3 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. $1,160 3,880 2. Applications in process on September 1, 80 Applications started in September, 1,180 Completed applications during September, 820 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 Conversion costs September costs: Direct materials Direct labour Overhead 3. $7,660 11,050 11,086 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. (a) Your answer is correct. Determine the equivalent units of service (production) for materials and conversion costs. Conversion Materials Costs Total equivalent units T 12601 1084

Answer 1

Costs		Materials	Conversion Costs	Total
Unit costs
Costs in September		8820	26016	34836
Equivalent units		1260	1084
Unit costs		7.00	24.00	31.00
Costs to be accounted for
Work in process, September 1				5040
Started into production				29796
Total costs				34836
Cost Reconciliation Schedule
Costs accounted for
Transferred out				25420	=820*31
Work in process, September 30
Materials			3080		=440*7
Conversion costs			6336	9416	=440*60%*24
Total costs				34836