Syarikat SriNuri Food Industries is a halal ovalette manufacturer in Malaysia. The ovalette production process begins with the Mixing Department, where key ingredients such as Monoglyceride, Polyglycerol and Polysorbate are mixed in a special machine. In the Cooking Department which is the second process, the ingredients are cooked and mixed with water and colouring until thick. Once cooled, the finished ovalette is packed in the Packaging Department with each unit containing 150 grams of ovalette. Syarikat uses first-in-first-out (FIFO) method of costing system.

The following is information related to Cooking Department for December:

1. On December 1, the balance of work in process (WIP) is 500 units 70% completed. The cost details are as follows:

Mixing Department costs RM 2,200

Direct material RM 3,400

Conversion costs RM 4,290

2. Direct material is added in the process at 40% completion process. Conversion costs are involved evenly throughout the process.

3. Costs added in December are:

Mixing Department costs RM10,720

Direct material RM11,560

Direct labour RM10,050

Manufacturing overhead RM18,600

4. Cooking Department conducts quality checking at 60% completion process. Normal spoilage is 10% of all unit inspected. There were 5,000 spoilage units recorded in EPPA2033 3 December. These spoilage units can be sold for RM0.10 per unit, and these sales are considered immaterial.

5. Units completed are 25,000 units and WIP balance at December 31 is 10,000 units 80% completed.

Required:

a) Prepare the physical unit analysis, schedule of equivalent units and calculate the cost per unit equivalent for Cooking Department (Rounded the cost per equivalent unit to four decimal points). (13 marks)

b) Prepare Work in Process account for Cooking Department (Rounded your answer to the nearest ringgit). (5 marks)

c) Explain the purpose and accounting treatment practised in process costing for the following:

i) Normal losses

. ii) Abnormal gain.