Ethical Decision Making Stacy Lynn, Inc. (SLI) is a manufacturer of rice cookers

Question

Ethical Decision Making
Stacy Lynn, Inc. (SLI) is a manufacturer of rice cookers. The rice cookers sell for $45
per unit; the sales were 3,600 units in the current year, 2009. SLI has 400 units
available for sale at the end of 2009 and is projecting sales of 4,400 units in 2010. SLI is
planning the same production level for 2010 as in 2009, 4,000 units. The variable
manufacturing costs for SLI are $16 and the variable selling costs are only $.50 per unit.
The fixed manufacturing costs are $100,000 per year and the fixed selling costs are
only $500 per year. Assume that beginning inventory was -0- for 2009.
Stacy Ann Lynn, the great grand-daughter of the company

Explanation / Answer

PART 1:
Stacy should use FIFO method as it shows Maximum Profit & Higher Net income as compared to LIFO & Wgtd Avge method. This is tru when Prices are rising.

In falling prices also, FIFO method resultsin higher Accounting profit due to higher Inventory costs.

Part 2:
Based on that requirement, she should present the " full cost" method.

Part 3:
The main issue is if SLI goes for traditional method of costing , it will post a better profit, but the bank will not accept.
And the accepted method of the bank is not optimal for the activities of SLI.

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.