Name: ___________________________________________________ Password: _______________

I. The following data were taken from the books of Denver Company which manufactures a single
product through a two-department manufacturing process – Machining and Finishing. In the production
process, materials are added to the product in both departments at the beginning of the process.
Normal spoilage occurs in the finishing department and the spoiled units are not detected until units are
completed and inspected.

Machining Department Finishing Department

Units:
Beginning inventory 0 20,000
Stage of completion 50%
Transferred in 0 60,000
Started in production 80,000 0
Transferred out 60,000 60,000
Ending inventory 20,000 18,000
Stage of completion 25% 70%
Spoiled (lost) units 0 2,000
Beginning inventory cost:
Direct materials 0 28,000
Conversion cost 0 27,500
Prior department cost 0 118,000
Current costs:
Direct materials P 320,000 90,000
Conversion costs 130,000 193,800

Answer the following questions given independent assumptions:

1. Compute the cost of ending inventory and the cost of goods completed and transferred in the
Machining Department using FIFO costing

2. Compute the cost of ending inventory and the cost of goods completed and transferred in the
Machining Department using Average costing

3. Compute the cost of ending inventory and the cost of goods completed and transferred in the
Finishing Department using Average costing. Both departments use Average costing

4. Compute the cost of ending inventory and the cost of goods completed and transferred in the
Finishing Department using FIFO costing. Both departments use FIFO costing

5. Compute the cost of ending inventory and the cost of goods completed and transferred in the
Finishing Department using Average costing BUT lost units is discovered at the beginning. Both
deparments use Average costing.

6. Compute the cost of ending inventory and the cost of goods completed and transferred in the
Finishing Department using FIFO costing BUT lost units is discovered at the beginning. Both
deparments use FIFO costing