Mannisto Incorporated uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $$299,189$ and average assets of $$1,552,800.$ If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $$48,490$ more than under FIFO, and its average assets would have been $$42,790$ less than under FIFO.

Required:

Calculate the firm's ROI under each cost flow assumption $($FIFO and LIFO$).$

Suppose that two years later costs and prices were falling. Under FIFO, net income and average assets were $$349,299$ and $$1,808,310,$ respectively. If LIFO had been used through the years, inventory values would have been $$47,370$ less than under FIFO, and current year cost of goods sold would have been $$18,881$ less than under FIFO. 

Calculate the firm's ROI under each cost flow assumption $($FIFO and LIFO$).$

 

Answer rating: 100% (QA)

Answer First lets calculate ROI Return on Investment under FIFO and LIFO for the year of rising cost... View the full answer