In 2013, Mandrake Motorcycles declared bankruptcy. Subsequently, it was determined that in fiscal 2012, the company produced more units than needed to fill pending orders. The result was a substantial decrease in production cost per unit. The company uses the LIFO inventory method.

Required
Discuss how (or if) this information is consistent with the results of the analysis conducted in Problem, parts a and b.

Mandrake Motorcycles
Income Statements

Mandrake Motorcycles was started three years ago. The company manufactures and sells €œclassic€ cycles similar in style to Harley-Davidson and Indian motorcycles made in the late 1940s.The following financial information for thecompany.

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Mandrake Motorcycles Balance Sheets December 31, 2012 December 31 2011 Assets Current assets: Cash and cash equivalents Accounts receivable nventory Other current assets Total current assets 240,000 185,000 850,000 200,000 1475,000 1,075,000 $2,550,000 425,000 200,000 630,000 210,000 1465,000 1,175,000 $2,640,000 Property, plant, and equipment, net Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Short-term debt payable Other current liabilities Total current liabilities $ 260,000 370,000 285,000 915,000 195,000 1,110,000 S205,000 320,000 280,000 805,000 410,000 1,215,000 Long-term debt Total liabilities Stockholders' equity: Common stock Retained earnings Total stockholders' equity 1,325,000 115,000 1440,000 $2,550,000 1,325,000 100,000 1,425,000 $2,640,000 Total liabilities and stockholders'equity Year Ended December 31 Year Ended December 31, 2011 $1,690,000 2012 Net sales Cost of goods sold Gross margin Operating expenses: $1,590,000 980,000 610,000 1175,000 515,000 300,000 210000 510,000 100,000 48,000 52,000 18,200 $33,800 Selling expenses 210,000 200,000 410,000 105,000 72,000 33,000 11550 21,450 General and administrative expenses Total operating expenses Operating income Interest expense Income before taxes Income taxes Net income