Case: ToughMax imports and distributes battery powered construction tools in Australia These are purchased from various supplies based in Taiwan and imported to Australia. ToughMax currently sells and distributes to retailers in New South Wales only. The business plans to expand Australia wide and you have been invited to invest in the business. You have been provided with the information below to assist in the decision to invest in the business. Income Statement Tough Max Year ending 30 June 2020 2,570,000 (1,520,000) 1,050,000 Sales revenue COGS Gross profit Operating expenses: Salaries expense Rent expense Bad debts expense Interest expense Net profit (320,000) (51,000) (670) (150) 678,180 You have done some research about the business and have identified that ToughMax uses the moving average inventory costing method. The business has used this method to determine cost of goods sold since inception in 2017. Question 5.2 Advise Tough Max on what you think is the most appropriate inventory costing method to determine the cost of goods sold and describe why this method is the most appropriate. Choose at least two relevant principles, assumptions, qualitative characteristics, generally accepted accounting principles, and/or accounting standards (relevant theory), describe them, and explain how they support your choice of method. Answer this question in the following format: 1. The most appropriate inventory costing method to determine the cost of goods sold is.......(1 mark) 2. The first relevant theory which supports the choice of this method is.... (describe theory) (2 marks) 3. This theory supports the choice of method by... (explain how this theory supports your choice of method) (2 marks) 4. The second relevant theory which supports the choice of this method is.... (describe theory) (2 marks) 5. This theory supports the choice of method by... (explain how this theory supports your choice of method) (2 marks)