Koala Furniture Ltd, an office furniture retailer and wholesaler, carries a particular brand of office chair. During the year ended 30 June, the following purchases occurred.

As at 1 July, Koala Furniture Ltd had 18 chairs in inventory, costed at $42 per unit. As at 30 June, an inventory count revealed 21 chairs in inventory.

Required
(a) Explain why the inventory costing method affects the financial reporting numbers.
(b) Compare the value of the office chairs on hand as at 30 June to be included in the inventory balance in the statement of financial position, under the following cost flow assumptions:
(i) FIFO
(ii) Weighted-average.

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August October December March 50 chairs at $45 60 chairs at $54 55 chairs at $60 60 chairs at $58