Case Study 9-1 LIFO Accounting at Tamar Chemicals Purchasing Policy UnderLIFO Tamar Chemicals sclis chemical compounds made from a male rial known as R330. The company has used LIFO as its inven- tory cost-flow assumption since it was founded 25 years ago The inventory of Ru330 on December 31, 2017 com. prised 4,000 kg, costing $161,200. Most of the cost comes from inventory acquired in previous years, as shown in the fol lowing table 7000 kg of Rtu330. Current policy is to maintain a stock of 4000 kg. Because of the pending price drop, the purchasing agent suggests that the company should decrease inventory to 600 kg by the end of 2018 and replenish it to the desired level of 4,000 kg carly next year. The chief accountant disagrees. If inventory falls to 600 kg at the end of 2018, the consumption of old, low-cost LIPO layers will cause cost of goods sold to be unusually low. As a result, the company will face a high income tax liability. The chief accountant suggests that Tumar plan 2018 purchases to maintain an end-of-year inventory of 4,000 kg. 2017 Year and Inventory Purchase price per kg Year acquired kg Cost 530 2008 2013 2014 2017 46 48 2.000 200 400 560,000 9,200 19,200 72,800 $161,200 52 1,400 4,000 Required 1. Assuming that sales for 2018 require 7,000 kg of Rtu330, calculate the cost of goods sold and the end-of-year inventory for 2018 if Tamar Chemicals follows the advice of the chief accountant 2. Recalcolate cost of goods sold and the end-of-year inven- tory if the company follows the purchasing agent's advice. 3. The CEO wants to know what discretion the company has to vary income in 2018 by planning its purchases of R330. If the firm follows the chief accountant's policy. net income for 2018 will be 560,000. What is the range of net income that the company can report by managing pur- chases of Rtu330? Assume a tax rate of 30% Rtu330 cost 562 per kg throughout most of 2018. It is now late 2018. and prices are not expected to change before the end of the year. But Tamar's purchasing agent expects the price to fall back to 557 early in 2019. Sales for 2018 require Case Study 1-2 Deere and CNH Global Performance Effects of Required Inventory Accounting Choice a. What is CNHS Dolicy reading inventory valuation and Deere and CNH Global compete against each other as manu- cast-flow assumptions? facturers in the global market for aericultural and construction Is. What is the balance is CNH's inventory account at the