Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An executive in a merchandising company receives an annual bonus equal to 5% of net income. Historically, the company has calculated cost of goods sold

An executive in a merchandising company receives an annual bonus equal to 5% of net income. Historically, the company has calculated cost of goods sold and ending inventory using LIFO and has maintained 30,000 of units in inventory for the last ten years. The executive is recommending the company reduce the number of units in year-end inventory to 1,000. Over the ten-year period, the cost per unit of inventory has increased from $60 per unit to $110 per unit.

Respond to the following in a minimum of 175 words:

  • In what ways would a reduction in inventory help the company?
  • In what ways would the change from LIFO to FIFO help the executive personally?
  • Would you approve the proposal to move from LIFO to FIFO? Why, or why not?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Agile Auditing Transforming The Internal Audit Process

Authors: Rick A. Wright Jr. CIA

1st Edition

1634540689, 978-1634540681

More Books

Students also viewed these Accounting questions

Question

7. Identify the road of trials in The Lion King.

Answered: 1 week ago

Question

What are the pros and cons regarding Angelica joining the union?

Answered: 1 week ago