Case Lifo Merrimack Tractors and Mowers Product View Essay

1574 Words Apr 23rd, 2014 7 Pages
| CASE STUDY- INVENTORY- MERRIMACK TRACTORS AND MOWERS, INC. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ques 1 | Give a very brief description of the situation that Rick Martino and Merrimack are facing | | | | | | | | | | | | | | | | | | | | | Ans | Merrimack Tractors and Mowes Inc, is based in Nashua and Ricardo Martino is the president and chief operating officer. The company had outsourced manufacturing to japan and later to china to benefit cost for all the tractors and machines . Even with shipping cost the mowers ‘ variable cost was substantially less than it would have been in Nashua.
In 2008 due to the economic development production & logistics cost
…show more content…
• Increasing tax burden is a concern but at least it will give Rick some time to see how real problem of rising costs can be solved.
• Further, after Olympics in China are over there is a possibility that wages and labour costs can come down and dollar may regain strength. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | Q 2 | Explain the different methods of accounting for inventory | | | | | | | | | | | | | | | | | | | | | Ans | There are 4 types of method of calculating inventories namely, | | | | | | | | | | | | | | LIFO | | | | | | | | | | | | | | | | | | This is a Last in First out method which means the recent or the latest products with high prices are to be sold at first and the low cost goods are kept as inventories. This in turns shows a rise in the cost of goods sold thus reducing the liability on taxes .LIFO is most suitable when there is a deflation in the market which can show better profit scale. | | | | | | | | | | | | FIFO | | | | | | | | | | | | | | | | | | This is a First in First out method which means the first products with lower prices are to be sold at first and the high cost goods are kept as inventories. This in

Related Documents