Question 3. Accounting for Inventories

Very Ugly Mitch Limited (VUML) is confused about how to account for inventory. The CEO of VUML is from Tasmania, Australia so is short of a few bricks in the wall.

Thus, the crack team from Harry, Larry and Mo Consulting have been called in to help.

As at December 1, the amount of inventory in stock comprised 20,000 units of stuffed toy camel that cost $92.

During the month of December, the following flow of merchandise inventory is noted:

1. On December 3, VUML purchased 16,000 units of stuffed toy camels that cost $85 each from Mixed Manufacturing Limited.

2. On December 7, VUML purchased 11,000 units of stuffed toy camels that cost $82 each from Poor Style Manufacturing Limited.

3. On December 12, VUML sold 29,400 units of stuffed toy camels for $121 each to Bad Client Limited.

4. On December 17, VUML purchased 18,200 units of stuffed toy camels that cost $95 each from Mixed Manufacturing Limited.

5. On December 22, VUML sold 23,900 units of stuffed toy camels for $116 each Broken Toys Limited.

6. On December 23, VUML purchased 16,100 units of stuffed toy camels that cost $98 each from Good Style Manufacturing Limited.

7. On December 27, VUML sold 15,500 units of stuffed toy camels for $129 each to Bye-Bye Stores Limited.

Required:

Calculate the sales revenue, ending inventory balance and the cost of goods sold for the month of March using (a) weighted average cost; and (b) FIFO. (The perpetual system is always going to be used)