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E3-16 Royale

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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.



Assume Royale Mortgage Company uses the FIFO method.

Also assume that the applications in process on September 1 were 100% complete as to
materials (forms) and 40% complete as to conversion costs.

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.

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