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Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $260,472 and average assets of $1,427,670. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $36,100 more than under FIFO, and its average assets would have been $31,190 less than under FIFO. Required: a. Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO). (Enter your answers as percentages rounded to 1 decimal place (i.e., 12.2%).) b. Suppose that two years later costs and prices were falling. Under FIFO, net income and average assets were $304,072 and $1,746,020, respectively. If LIFO had been used through the years, inventory values would have been $43,040 less than under FIFO, and current year cost of goods sold would have been $24,802 less than under FIFO. Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO). (Enter your answers as percentages rounded to 1 decimal place (i.e., 12.2%).)

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Answer:

Please see attached solution to the question above.

Step-by-step explanation:

a. ROI under FIFO = 18.2%

ROI under LIFO = 16.1%

b. ROI under FIFO = 17.4%

ROI under LIFO = 19.3%

Further explanation is as attached below for the above question.

Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs-example-1
User Biagio Arobba
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