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(a) The managers of Groceries R' Us receive performance bonuses based on the net income of the firm. If they are in charge of choosing
(a) The managers of Groceries R' Us receive performance bonuses based on the net income of the firm. If they are in charge of choosing the company's inventory cost flow assumption which method are they likely to choose during period of rising prices? Why? (4 points) (b) If the CFO, who is incentivized to maximize cash flows, chooses the inventory cost flow assumption, which method is she likely to choose? Why? (4 points) (c) As a grocery store, the managers stock the shelves to ensure that the older inventory is sold first. Does this affect either of your above answers? (2 points)
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