Calculate the firms roi under each cost flow assumption

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Reference no: EM131988351

Problem

Suppose that two years later costs and prices were falling. Under FIFO, net income and average assets were $275,659 and $1,858,210, respectively. If LIFO had been used through the years, inventory values would have been $42,040 less than under FIFO, and current year cost of goods sold would have been $17,318 less than under FIFO. Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO) give answers in percentage.

Mannisto, Inc., uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $230,119 and average assets of $1,533,090. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $39,220 more than under FIFO, and its average assets would have been $33,780 less than under FIFO.

Required:

a. Calculate the firm's ROI under each cost flow assumption.

Reference no: EM131988351

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