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.

1. Applications in process on September 1:100.

2. Applications started in September: 1000

3. Completed Applications during September:800.

4. Applications still in process at September 30 : 100% complete as to materials (forms) and 60 % complete as to conversions costs.

Beginning WIP:

Direct materials - $1,000

Conversion costs- $3960

September costs:

Direct Materials - $ 4500

Direct labor- $ 12000

Overhead $ 9,520

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.