Buzz and Woody us a perpetual inventory system and weighted average cost method for calculating ending inventory and cost of goods sold but Jesse, the owner is wondering if maybe she should switch to fifo. To help her make the decision she has asked you to prepare a comparison of the gross profit under fifo and weighted average inventory systems.

Buzz and Woody purchased inventory during July as follows:

date units price per unit total cost

Begining inventory 1000 $1.00 $1000

July 6 1000 $1.50 $1500

July 12 1500 $1.60 $2400

july 22 1700 $2.00 $3400

July 29 1000 $2.00 $2000

Buzz & Woody had 2 sales in July:

july 13 - 2200 units @ $5/unit

July 26 - 1650units @$6/unit

Required:

Complete each of the following:

a. Calculate the cost of good sold for Buzz and Woody for the month of July using both weighted average and fifo inventory systems

b. Calculate the gross profit for Buzz & woody Company limited for July 2020 using both weighted average and FIFO

c. Prepare a note explaining what causes the difference in the cost of difference in the cost of goods sold between the weighted average cost and FIFO methods