Oculus is a proprietorship that produces a specialized type of round window. It is after the fiscal year-end for 2019,
Raw materials consist of glass and aluminum. Due to their nature, these inventories cannot be specifically identified. Consequently, Oculus has used the first-in, first-out (FIFO) method for all of its inventories. Oculus uses a periodic inventory system, and the above financial information has been prepared using FIFO.
Input prices had been reasonably stable prior to 2018. However, as a result of rapidly rising prices for raw material inputs, the owner of Oculus feels that the FIFO method is overstating income. He wonders whether and by how much his financial results would change if he were to use the weighted-average cost method for inventories. To help address this issue, he has assembled additional information on the inventories for Oculus (raw material quantities are expressed in units equivalent to one standard finished window):
Prepare the revised balance sheets and income statements for Oculus under the weighted average cost method.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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