Plus life Limited (“Plus life”) is a nutritional infant formula retailer in New Zealand.  Dennis Miles, the owner, has been having difficulties in accounting for the company’s current assets and has asked for your assistance.  Plus life is a GST registered company in New Zealand(15%).

Plus life purchases its infant formula powder in bulk and resells it in smaller quantities to customers. The following infant formula powder inventory information relates to the month of  October  2020.    Plus life operates on an accruals basis and uses a perpetual,  First  In  First  Out  (FIFO)  inventory method  (assume that all sales are on credit and ignore GST).

    Infant Formula Powder (Inventory Information)

   Date (2020)                                                Details

1 October                                                 Opening Balance:30 kg’s at $2.10/kg (Cost Price)

5 October                                                 Purchases:45 kg’s at $2.20/kg (Cost Price)

10 October                                               Sales:52 kg’s at $2.80/kg (Selling Price)

22 October                                               Purchases:34 kg’s at $2.30/kg (Cost Price)

31 October                                               Sales:19 kg’s at $2.80 /kg (Selling Price)

(i). Calculate the total cost of goods sold and gross profit from the sale of infant formula powder for the month ended 31 October 2020.

(ii). Describe the effect on the gross profit and closing inventory balance for  October  2020 if Plus life had used the Weighted Average Cost method for recording inventory rather than the First In First Out method (no calculations required).