An executive in a merchandising company receives an annual bonus equal to 5% of net income. Historically,
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An executive in a merchandising company receives an annual bonus equal to 5% of net income. Historically, the company has calculated the cost of goods sold and ending inventory using LIFO and has maintained 30,000 units in inventory for the last 10 years. The executive is recommending the company reduce the number of units in year-end inventory to 1,000. Over the 10-year period, the cost per unit of inventory has increased from $60 per unit to $110 per unit.
In what ways would the change from LIFO to FIFO help the executive personally?
Related Book For
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
7th Edition
Authors: Gary A. Porter, Curtis L. Norton
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