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For this assignment, you have another brilliant idea that you want to propose to your manager. You want to sell t - shirts on the
For this assignment, you have another brilliant idea that you want to propose to your manager. You want to sell tshirts on the company intranet site to employees to generate additional revenue for the company. The tshirts can be purchased by employees for themselves, family members, suppliers, or customers. You will sell the tshirts for $ each. Your manager agrees with your idea and tells you to proceed.
To proceed, you need to find a vendor that can supply you with the tshirts to build up your inventory.
On xxxx you found a vendor that can supply you with tshirts for $ each and you purchase tshirts.
Unfortunately, the vendor you have been working with suddenly went out of business and you must quickly find another vendor. With some success, you do find another vendor however, the cost to you is $ per tshirt and you decide to purchase tshirts. You place this order on xxxx
Once again, the second vendor goes out of business and you must find yet another vendor. You do but things are getting worse. The vendor knows you need the inventory and are desperate. The new vendor decides to charge you $ per tshirt. You are getting in orders so you have an idea of what your sales should be and you have no choice but to purchase tshirts from this vendor at $ per tshirt.
To summarize, here are your inventory purchases:
Date
# of Units
Cost per Unit
xxxx
$
xxxx
$
xxxx
$
Now that you have stocked up on inventory, sales begin coming in Your sales activity for April, May, and June are as follows:
Month
# of Sales
April
May
June
Once you have performed your analysis, determine which inventory methodology would be better to use based on the gross profit.
Once you have made a decision, you are to submit a memo to your boss and include the following:
Introduction
Recap the idea
Explain that you are preparing this memo to differentiate the gross profit based on an inventory methodology.
LIFO
Explain what LIFO is and its financial impacts.
Why would some industries use LIFO over FIFO?
What are the results using the LIFO inventory methodology?
FIFO
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