Case ID: 3217     Solution ID: 22538     Words: 1381 Price $ 75

Merrimack Tractors and Mowers LIFO or FIFO Case Solution

Case Solution

At the point when students have the English-dialect PDF of this Brief Case in a course pack, they will likewise have the alternative to buy a sound adaptation. At Merrimack Tractors and Mowers in 2008, item assembling expenses are expanding quicker than contenders' expenses, and subsequently profit are liable to fall underneath those reported in 2007. The organization president and the organization controller have examined this issue, and the controller has said that if the organization changed from LIFO to FIFO it may be conceivable to keep up income development in 2008. He readies a notice to the president clarifying how stock stream presumptions function and gives ace forma salary articulations that demonstrate that, for one item (reel cutter units), embracing FIFO would permit Merrimack to report higher wage in 2008 than it did in 2007, however higher wage assessments would need to be paid.

Excel Calculations

Pro forma Income Statement 2007, 2008 and 2009

Using LIFO inventory Method


Pro forma Income Statement 2007, 2008 and 2009

Using FIFO inventory Method


Changes Due to change of Inventory Method from LIFO to FIFO

Questions Covered

What are the issues the CEO is facing; I.E.; what are his concerns? 

Explain the effect of what the CFO is suggesting on.                  a. The financial statements

   b. The users of the financial information

Write up the above along with your decision as to what should be done for hand-in and be prepared to discuss.