Shades of the Caribbean design and manufacture sun-glasses for the tourism sector. The accounting records of the business reflect the following data at June 30, 2018:

Inventory	1/7/2017	30/6/2018
Raw Materials	$230,000	$260,000
Factory Supplies	$35,000	$24,000
Work in Progress	$358,000	$213,000
Finished Goods	$975,400	$585,000

Other information:

Sales Revenue	$5,675,000
Factory Supplies Purchased	64,000
Direct Factory Labor	792,000
Raw Materials Purchased	560,000
Plant janitorial service	37,000
Depreciation: Plant & Equipment	186,000
Total Utilities 1	481,250
Production Supervisor's Salary	450,000
Hiring of Specialized Manufacturing Equipment	68,000
Insurance on Plant & Equipment	112,000
Delivery Vehicle Drivers' Wages	53,850
Depreciation: Delivery Vehicle	240,000
Property Taxes 2	240,000
Administrative Wages & Salaries	850,750
Advertising Expenses	1% of Sales Revenue

¹ Of the total utilities, 80% relates to manufacturing and 20% relates to general and administrative costs.

²The property taxes should be shared: 75% manufacturing & 25% general & administrative costs

Required:

(A) Calculate the raw material & factory supplies used by Shades of the Caribbean.

(B) What is the total manufacturing overhead cost incurred by Shades of the Caribbean during the period?

(C) Determine the prime cost & conversion cost of the product manufactured.

(D) Prepare schedule of cost of goods manufactured for the year ended June 30, 2018, clearly showing total manufacturing costs & total manufacturing costs to account for.

(E) Prepare income statement for the year ended June 30, 2018, clearly showing the calculation of Cost of Goods sold. List the non-production overheads in order of size starting with the largest.

(F) Given that the company manufactured 1,600 sun-glasses, compute the company's unit product cost for the year.

Part 2

One Stop Electrical Shop are merchandisers of household fixtures & fittings. The business began the last quarter of 2020 (October to December) with 25 Starburst Wall Clocks at a total cost of $153,000. The following transactions took place during the quarter.

October 10	100 clocks were purchased on account at a cost of $6,225 each. In addition, One Stop paid $120 cash on each clock to have the inventory shipped from the vendor's warehouse to their warehouse
October 31	During the month 90 clocks were sold at a price of $8,300 each. (20 of these clocks sold were on account to a long-standing customer of the business)
November 1	A new batch of 60 clocks was purchased at a total cost of $406,500
November 10	5 of the clocks purchased on November 1 were returned to the supplier, as they were damaged
November 30	The sales for November were 58 clocks which yielded total sales revenue of $498,800
December 2	Owing to increased demand, a further 110 clocks were purchased at a cost of $7,400 each and these were subject to a trade discount of 2% each.
December 6	Kimoya Rennie, a customer to whom 8 clocks were sold at the start of the first business day in November, returned 2 of the clocks, as they did not match her specifications.
December 31	117 clocks were sold during December at a unit selling price of $9,220.
December 31	An actual inventory count was carried out which revealed that there were 22 Starburst wall clocks in the store room.

Unless otherwise stated, assume that all purchases are on account and all sales are for cash.

Required:

(A) Prepare perpetual inventory record for this merchandise, using the last in, first out (LIFO) method of inventory valuation, to determine the business's cost of goods sold for the quarter and the value of ending inventory.

(B) Given that selling, distribution and administrative costs for the quarter were $77,300, $42,105 and $111,830 respectively, prepare an income statement for One Stop Electrical Shop for the period ended December 31, 2020

(C) State the journal entries necessary to record the transactions on October 10 and October 31, assuming the company uses a:

- Periodic inventory system

- Perpetual Inventory System

(D) The owner of the business, Roger Lightfoot, has stated that his objective is to cut back on his tax liability as much as possible and at the same time have his balance sheet looking at its best and is of the view that the LIFO method would be best to achieve both. Do you agree with Roger?

Explain your answer clearly distinguishing between the first in, first out (FIFO) and last in, first out (LIFO) methods of inventory valuation, with reference to IAS 2.