Assigning cost (perpetual method)  LO4 Select the correct answer. Show any workings required and provide reasons to justify your choice. Cairns Ltd uses the perpetual method. Cairns Ltd’s inventories transactions for August 2021 were as follows. No. Unit cost Total cost Aug. 1 Beginning inventories 20 $4.00 $80.00 7 Purchases 10 $4.20 $42.00 10 Purchases 20 $4.30 $86.00 12 Sales 15 ? ? 16 Purchases 20 $4.60 $92.00 20 Sales 40 ? ? 28 Sales returns 3 ? ? 1. Using this information, assume that Cairns Ltd uses the FIFO cost formula and that the sales returns relate to the 20 August sales. The sales return should be costed back into inventories at what unit cost?

(a) $4.00

(b) $4.20

(c) $4.30

(d) $4.60 2. Assuming that Cairns Ltd uses the moving weighted average cost formula, the 12 August sales should be costed at what unit cost?

(a) $4.16

(b) $4.07

(c) $4.06

(d) $4.00