Phenerome Corporation is a diversified company that has acquired a number of subsidiaries through mergers. The company is instituting an inventory control system that would incorporate economic inventory policy considera- tions. One of the company officers has noted that some subsidiaries use last- in, first-out (LIFO) for financial reporting and others use first-in, first-out (FIFO). The officer asks you: "These different inventory methods make it very difficult for us to prepare the corporate financials and our tax return. How will they affect operation of an inventory system since the inventory costs will be different for the same item in a different subsidiary?"