We are here with you hands in hands to facilitate your learning & don't appreciate the idea of copying or replicating solutions. Read More>>

Looking For Something at vustudents.ning.com? Click Here to Search

www.bit.ly/vucodes

+ Link For Assignments, GDBs & Online Quizzes Solution

www.bit.ly/papersvu

+ Link For Past Papers, Solved MCQs, Short Notes & More


Dear Students! Share your Assignments / GDBs / Quizzes files as you receive in your LMS, So it can be discussed/solved timely. Add Discussion

How to Add New Discussion in Study Group ? Step By Step Guide Click Here.

Topic to be tested: 

  • LIFO-FIFO Costing methods

 

Learning objectives: 

  • To learn about the practical implementation of costing methods for proper inventory management

 

Discussion Question:

Silver Corporation (SC) - an oil refining company is dealing in oil refining and marketing business for the last two years. The company has centralized decision making system, so all the decisions are made by the top level management at its head office located at Oil City. Due to poor economic conditions in the country, the prices of inputs have risen to an abnormal hike. Due to this inflationary pressure, the companies are facing with the higher cost of production and this has ruined the corporate profits. To tackle this alarming situation, SC has appointed a certified cost analyst to figure out the main cost issue.

 

After detailed observation, the analyst concluded that the company needs to improve its inventory costing system. He argued that, if the company successfully manages the inventory then the cost will be reduced remarkably.

                                                 

On the basis of the analyst’s recommendations, the management assigned a task of improving its inventory costing system to Mr. White – Operations Manager, and Mr. Blue – Store Manager. They designed an initial inspection plan to analyze the inventory movements during different frame of periods. Their intention was to search and recommend at least the most efficient inventory costing system. After completing the analysis, both the managers came up two different recommendations – Mr. White recommended the use of FIFO costing method as this will lower the company’s taxable income.  Whereas, Mr. Blue came up with the suggestion to adopt LIFO costing method as this may help the company in acquiring loan from any bank.

 

The management feels it difficult to decide which one of these two to adopt, as both are conducive.

 

Requirement:

As a student of cost accounting you are asked to help the SC management that either the recommendations given by both managers (Mr. White & Mr. Blue) are appropriates for inflationary period (Ignore IAS – 2 on Inventory) or not? Support your answer with logical reasoning.

 

Important Instructions:

 

1. Your discussion must be based on logical facts.

2. The GDB will remain open for 2 working days/ 48 hours.

3. Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.

4. Obnoxious or ignoble answer should be strictly avoided.

5. Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB is over.

 

For Detailed Instructions please see the GDB Announcement

 

+ How to Follow the New Added Discussions at Your Mail Address?

+ How to Join Subject Study Groups & Get Helping Material?

+ How to become Top Reputation, Angels, Intellectual, Featured Members & Moderators?

+ VU Students Reserves The Right to Delete Your Profile, If?


See Your Saved Posts Timeline

Views: 3479

.

+ http://bit.ly/vucodes (Link for Assignments, GDBs & Online Quizzes Solution)

+ http://bit.ly/papersvu (Link for Past Papers, Solved MCQs, Short Notes & More)

+ Click Here to Search (Looking For something at vustudents.ning.com?)

+ Click Here To Join (Our facebook study Group)

Replies to This Discussion

please discuss here

Yes it is correct. By using FIFO method the Cost of goods sold figure will be low and value of closing stock will be recorded at high value in increasing price scenario of the materials. So the income is high, the tax will be more. By using LIFO cost will be recorded high and income will be less with less tax and cash flow of the company is better. :)

i think  Mr. blue is right . what do you say guys...

my vote for FIFO

 i  think FIFO as it will lower cost of goods sold but what his mean  (Ignore IAS – 2 on Inventory)?? any  body willing to discuss its seems its pretty easy no body cares to discuss??????

my vote for FIFO

Please discuss your ideas with logics.

aise to koi faida nahi ha kehne ka k White theek ha ya blue.

fdgsdg

Please Discuss here about this GDB.Thanks

Our main purpose here discussion not just Solution

kindly update the solution as soon as possible. 

I guess Mr. blue is wright because under LIFO method cost of goods sold will be highest thus lower tax margins which will increase the cash in flow. and then the company can borrow more money of basis of more cash inflow.
and MR. white is saying FIFO will lower the taxable income, but FIFO increases the taxable income as it increases the net income, so more income = more taxes ..

is it right?

RSS

Latest Activity

+ ! ! dAd's anGeL ❤️ liked + ! ! dAd's anGeL ❤️'s discussion -_-
44 minutes ago
+ ! ! ! ! ! ! maho+++ replied to + IUUOƆƎUT +'s discussion یہ تو حسن و عشق کے ہیں مرحلے
3 hours ago
+ ! ! ! ! ! ! maho+++ posted a discussion
3 hours ago
+ ! ! ! ! ! ! Sm!Le updated their profile
3 hours ago
+ Տɑíɾɑ Ƙհɑղ + replied to Asad's discussion ربا سچیا تُوں تے آکھیا سی
3 hours ago
+ ! ! ! ! ! ! maho+++ replied to + IUUOƆƎUT +'s discussion یہ تو حسن و عشق کے ہیں مرحلے
3 hours ago
+ IUUOƆƎUT + replied to + IUUOƆƎUT +'s discussion یہ تو حسن و عشق کے ہیں مرحلے
3 hours ago
+ ! ! S░!░N҉░G҉░E҉░R​⭐️ replied to + IUUOƆƎUT +'s discussion یہ تو حسن و عشق کے ہیں مرحلے
3 hours ago
+ ! ! S░!░N҉░G҉░E҉░R​⭐️ liked + IUUOƆƎUT +'s discussion یہ تو حسن و عشق کے ہیں مرحلے
3 hours ago
+ M.Tariq Malik replied to + M.Tariq Malik's discussion MTH603 All Current Mid Term Papers Fall 2019 (14 to 26 December 2019) & All Solved Past Papers, Solved MCQs & Helping Material in the group MTH603 Numerical Analysis
3 hours ago
+ M.Tariq Malik replied to + M.Tariq Malik's discussion MTH603 All Current Mid Term Papers Fall 2019 (14 to 26 December 2019) & All Solved Past Papers, Solved MCQs & Helping Material in the group MTH603 Numerical Analysis
3 hours ago
+ M.Tariq Malik replied to + M.Tariq Malik's discussion MTH603 All Current Mid Term Papers Fall 2019 (14 to 26 December 2019) & All Solved Past Papers, Solved MCQs & Helping Material in the group MTH603 Numerical Analysis
3 hours ago

Today Top Members 

© 2019   Created by + M.Tariq Malik.   Powered by

Promote Us  |  Report an Issue  |  Privacy Policy  |  Terms of Service

.