"The theme of the event was 'Christmas around the World' with different zones at the event modeled accordingly and including a 'Kiwiana' theme."
Other purchases for the event included an "inflatable Santa with two reindeer" and a "turtle swim ring."
Labour's economic development spokesman, David Clark, said the incident and the resulting cost to the tax-payer was "sheer nonsense".
"Taxpayers are being fleeced for inappropriate schoolboy antics at a government department".
Bill English, as acting Prime Minister, stated that it is "good for the kids" to keep morale up at MBIE.
MBIE chief financial officer Iain Cossar said he wasn't in attendance at the party:
"I don't know what happened to the sheep. I'm not happy about what happened to the sheep but something occurred during the course of the evening and we've had to repair them."
This is the latest of a number of recent spending gaffes by MBIE, including hair straighteners, sun decks, a TV screen, and $800,000 on media monitoring.