Derby Company produces baseball gloves and cricket gloves. It has two departments that process all products. During July, the beginning Work-in-Process in the Cutting department was half completed as to conversion, and fully complete as to direct materials. The beginning inventory included $40,000 for materials and $60,000 for conversion costs. Ending work-in-process inventory in the Cutting department was 40% complete. Direct materials are added at the beginning of the process.

Beginning Work-in-Process in the Finishing department was 80% complete as to conversion. Direct materials for Finishing the units are added near the end of the process and conversion costs are added evenly throughout. Beginning inventories included $28,000 for transferred-in costs and $32,000 for conversion costs. Ending inventory was 30% complete. Additional information about the two departments is in the table below:

	Cutting	Finishing
Beginning work-in-process units	20,000	26,000
Units started this period	60,000
Units transferred this period	66,000
Ending work-in-process units		20,000
Material costs added	$48,000	$38,000
Conversion costs	$28,000	$69,500
Transferred-out cost	$130,000

Required:

1. Prepare a production cost worksheet, using WEIGHTED AVERAGE for the finishing department. (12 marks) Round to two decimal places in calculations

2. Prepare the journal entry to recognise COGM for the period transferred out of the Finishing Department. (1 marks)

3. Explain the effect on the asset account Finished Goods, in periods of rising prices if using a FIFO method of process costing versus WEIGHTED average method of process costing and there are ending inventories. (1 Mark) What is a benefit that