Timmet Bhd produces a variety of stationery products. One product needs to pass through two processes: Blending and Moulding. Two ingredients, paraffin and pigment, are added at the beginning of the blending process and heated and mixed for several hours. After blending, the resulting product is sent to the Moulding Department, where it is poured into moulds and cooled. The following information relates to the blending process for August:

Work in process, August 1, had 20,000-pound of product, 20 percent complete with respect to conversion costs. Cost associated with partially completed units were:

Paraffin RM120,000

Pigment RM100,000

Direct labour RM30,000

Overhead appliedRM10,000

Work in process, August 31, had 30,000 pounds of product, 70 percent complete with respect to conversion costs.

Units completed and transferred out totalled 500,000 pound. Costs added during the month were:

Paraffin RM3,060,000

Pigment RM2,550,000

Direct labour RM3,877,500

Overhead appliedRM1,292,500

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 gives higher cost of the finished goods, and explain the difference between the two costing methods. The report must also include a physical flow schedule and an equivalent unit schedule.