The Following Information Is for Pelham Company for 2013

question 8

Essay

The following information is for Pelham Company for 2013 Required:
a) Assuming that Pelham uses the LIFO cost flow method, determine how much product cost would be allocated to Cost of Goods Sold, and how much to Merchandise Inventory at the end of the year.
b) Based on your results from part a, calculate inventory turnover and average number of days to sell inventory.
c) Assuming that Pelham uses the FIFO cost flow method, determine how much product cost would be allocated to Cost of Goods sold, and how much to Merchandise Inventory at the end of the year.
d) Based on your results from part c, calculate inventory turnover and average number of days to sell inventory.
e) Compare your results from parts b and d. Do LIFO and FIFO give the same results for inventory turnover? Which is higher, and why?

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Definitions:

Efficiency

The ratio of output generated to the input used, illustrating how well resources are being utilized to produce desired results.

Flow Shop

A production system where operations are arranged in a sequence, and products flow from one operation to the next with little to no variation in the process paths.

Most Following Tasks Heuristic

A scheduling heuristic that prioritizes tasks based on the number of tasks that immediately follow them in a project network diagram.

Efficiency

The capacity to complete a task using the least amount of time and resources possible.