Question
Microsoft Corporation uses the FIFO method for inventory valuation. For the fiscal year ended June 30, 2023, the following data is provided: Beginning Inventory: 500,000
Microsoft Corporation uses the FIFO method for inventory valuation. For the fiscal year ended June 30, 2023, the following data is provided:
- Beginning Inventory: 500,000 units at $50 per unit
- Purchases:
- February 1: 750,000 units at $55 per unit
- July 1: 1,000,000 units at $60 per unit
- Sales:
- 1,800,000 units sold during the year
- Ending Inventory: 450,000 units
a. Calculate the cost of goods sold (COGS) using the FIFO method for Microsoft Corporation. b. Determine the value of ending inventory using the FIFO method. c. Discuss how FIFO impacts Microsoft Corporation’s financial performance and profitability ratios. d. Analyze the implications of FIFO on Microsoft Corporation’s cash flow and liquidity position. e. Evaluate the effectiveness of FIFO in managing Microsoft Corporation’s inventory turnover. f. Recommend strategies for Microsoft Corporation to optimize inventory management under FIFO.
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