Hi-Tech Mortgage Company uses a process costing system to accumulate costs in it

Question

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, 120 Applications started in September, 1,190 Completed applications during September, 800 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 $1,110 3,910 2. Conversion costs September costs: Direct materials Direct labour Overheacd $6,750 11,900 10,734 3. 4. 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.

Explanation / Answer

Equivalent unit of production

Material Conversion Unit transferred out 800 800 Ending work in process (120+1190-800) 510*100% = 510 510*60% = 306 Total equivalent unit 1310 1106

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