618,876,000 (sales)
475,476,000 (cost of goods sold)
143,400,000 (gross profit)
102,112,000 (selling and admin expenses)
41,288,000 (income from operations)
24,712,000 (other expenses)
16,567,000 (income before income tax)
7,728,000 (income taxes)
8,848,000 (net income)


inventories.inventories are valued at the lower of cost or market and include material labor and produstion overhead costs. Inventories consisted of the following:

current year
27,512,000 (finished goods)
34,363,000 (raw materials and work in progress)
61,875,000
(5,263,000) (reduction to LIFO cost)
56,612,000

prior year
23,830,000 (finished goods)
33,244,000 (raw material or work in progress)
57,074,000
(3,993,000) (reduction to LIFO cost)
53,081,000


the last in first out LIFO method is used for determining thecost of lumber, veneer, microlan lumber, joints and open web joints. Approx 35 percent of inventories at the end of the current year were valued using the LIFO method. The first in first out FIFO method is used to determine the cost of all other inventories.


A. How much would income before taxes have been if FIFO costing had been used to value all inventories?
B. If the income tax rate is 46.66 percent what would incom tax be if FIFO costing had been used to value all inventories? In your opinion, is this differenc ein net income between the two methods material?
C. Does the use of a different costing system for different types of inventory mean that there is different physical flow of goods, among the differnet types of inventory? Explain

I don't know

When deciding which accountign method to use for rinventory, you have to look at the major differences between FIFO and LIFO. With FIFO, you get a better estimation of the value of inventory. While it can be used to increase net profits, it will also increase the amoutn of taxes a company will have to pay in.

LIFO is not a good indicator of inventory value because some of the inventory may be years old, deteriorated beyond use, or not compatible with newer versions. So the value will probabaly be lower than current prices. This decreases net profits which also effects net shares in the company. But using LIFO also gives you a break on taxes at the end of the year.