Tolbert Trumpet Company is nearing the end of its worst year ever. With two weeks until year-end, it appears that net income for the year will have decreased by 30% from last year. Jim Tolbert, the president and principal stockholder, is distressed with the year’s results. Tolbert asks you, the financial vice president, to come up with a way to increase the business’s net income. Inventory quantities are a little higher than normal because sales have been slow during the last few months. Tolbert uses the LIFO inventory method, and inventory costs have risen dramatically during the latter part of the year.
Write a memorandum to Jim Tolbert to explain how the company can increase its net income for the year. Explain your reasoning in detail. Tolbert is a man of integrity, so your plan must be completely ethical.