Question 2

Balkan Bhd, manufatures a caulking compound that goes through three processing stage prior

to completion. Information on work in the first department, Cooking Department, is given

below for May:

Production data:

Pounds in process, May 1; 10,000

(materials 100% complete; conversion 80% complete)

Pounds started into production during May 100,000

Pounds in process, May 31; 15,000

(materials 60% complete; conversion 20% complete)

Cost data:

Work in process inventory, May 1:

Materials cost RM1,500

Conversion cost RM7,200

Cost added during May:

Materials cost RM154,500

Conversion cost RM90,800

You need to prepare the cost reconciliation report for this process costing, but you are not sure

which method is the most suitable method to be implemented in the company. You need to

analyse which of these methods, either weighted average costing method or first in first out

costing method give higher cost of the finished goods and explain the differences between the

two costing methods. The report must also include a physical flow schedule and an equivalent

unit schedule. (40 marks)