Q5

Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $274,366 and average assets of $1,519,460. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $46,340 more than under FIFO, and its average assets would have been $33,500 less than under FIFO. Required: a. Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO). (Enter your answers as percentages rounded to 1 decimal place (i.e., 12.2%).) FIFO LIFO ROI 18.1 % 15.3 % b. Suppose that two years later costs and prices were falling. Under FIFO, net income and average assets were $328,596 and $1,851,950, respectively. If LIFO had been used through the years, inventory values would have been $41,230 less than under FIFO, and current year cost of goods sold would have been $22,825 less than under FIFO. Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO). (Enter your answers as percentages rounded to 1 decimal place (i.e., 12.2%).) FIFO LIFO ROI % %