StudentShare solutions
Triangle menu

Marrimark case(FIFO_LIFO) - Coursework Example

Not dowloaded yet

Extract of sample
Marrimark case(FIFO_LIFO)

The ever strengthening value of the Chinese currency which is denominated in Yuan or Renminbi against the US Dollar became another adverse factor for the company as this compounded and further elevated the increase in costs incurred by Merrimack. The flexibility in the exchange rate by Chinese authorities against US Dollar decreased from a CNY: USD ratio of 8.3:1 until mid-2005 to below 7.0:1 by early 2008. Oil prices increase further deteriorated the situation for Merrimack as this elevated shipping costs of transporting finished mowers to the United States by almost 200% with the cost of shipping a 40-foot container from Shanghai to US rising from $3,000 in 2000 to almost $9,000 by 2008. The above critical factors changed the advantage of outsourcing for Merrimack into a soul disadvantage as these cost increments did not affect Merrimack’s competitors such as The Toro Company who has its material manufacturing setup in the United States. This rival was comparatively less affected by the increase in manufacturing costs in Asia and indeed benefitted from the weakening dollar in export markets in which it played and competed. All these aspects shrank Merrimack’s sales margins for tractors and mowers and the projected bottom-line or net income of 2008 was lower than that of yielded in 2007 and earlier years. This was not acceptable to the stakeholders of the company and the outside directors pressurized the company’s CEO to keep growing earnings and profits otherwise which will lead to a professional manager to replace him who was not a family member of the Martinos. All these factors were taken into account but the idea of re-development and re-establishing of manufacturing operations in Nashua were dismissed by the company. Searching for another off-shore supplier was a possibility to carry out but that too not before 2009 to sustain the current trends of net income and growth of the company. These plans were not ought to be good and executable plans until the company controller or the CFO, James Colburn, thought of varying the inventory valuation methods for tractors, mowers and parts, to boost up Merrimack’s bottom-line and satisfy its stakeholders. The CFO had an idea to change the company’s current inventory valuation method (LIFO) into FIFO which will ultimately elevate earnings but will come together with an increase in the tax payables. This was a plan which the CEO had to clearly conceive in order for it to be executed or rejected. The CEO’s concern is to enhance the earnings position of the company and satisfy its stakeholders. After hearing the CFO’s idea about changing inventory valuation method, the CEO ordered the CFO to prepare a memo and a pro-forma income statement for the year 2008 to depict the changes in the bottom-line. The CEO is studying on the drastic impact which a simple change in accounting methods can bring for a company. Effect of CFO’s suggestion on Merrimack’s financial statements The change of the inventory valuation method from LIFO to FIFO which the CFO is suggesting would have a number of effects on the company’ ...Show more

Summary

FIFO & LIFO Inventory Valuation Methods Merrimack Tractors & Mowers, Inc. Case Study Customer Name Instructor Name University Issues the CEO is facing  The issues which the CEO or the President of Merrimack Tractors and Mowers, Inc., Rick Martino, is facing and concerned with includes most prominently the projected decline in the bottom-line or net income of the company in the year 2008 which is lesser than 2007 and earlier years…
Author : lueilwitzitzel
Marrimark case(FIFO_LIFO) essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the coursework on your topic
"Marrimark case(FIFO_LIFO)"
with a personal 20% discount.
Grab the best paper

Related Essays

Case Analysis
The biggest example in the 21st century on how things can turn in a heartbeat is the case of K-mart who used to be head to head with Wal-Mart and the company almost disappeared and survived due to bankruptcy protection. Within this industry on of the products
3 pages (750 words) Coursework
Case Study
One alternative for the use and development of their idea can be publishing their proposal in a research or trade journal. The main advantage of this would be
5 pages (1250 words) Coursework
Case scenarios
A. Considering the fact that Pat is extremely punctual, it is obvious that he sees himself as a hard and diligent worker. He also sees himself as a likeable person because he enjoys working in an
1 pages (250 words) Coursework
Case Study
The merger would cause a movement of the head office from San Diego to Los Angeles, result in downsizing and job losses of between 1000-1600 positions, and also increase the pollution level of Los Angeles. It was reminiscent of the 1930s when a
2 pages (500 words) Coursework
BRIEF CASE
represents Teresa and Kurt R. Welterndorf is the representative for Pfeil Funeral Homes, Inc. in the Court of Appeal. Therefore, Teresa is the plaintiff/appellant and Pfeil is the defendant/appellee. The case, Teresa D. Oglesbee v. Pfeil Funeral Homes, Inc. is a premises
3 pages (750 words) Coursework
BRIEF CASE
Crews also accused Deichman of retaliation against him, making negative comments towards him and denying him the opportunities for career advancement. The district court rejected Crew’s
1 pages (250 words) Coursework
Case
After a critical analysis, I would make a decision. I would not accept a job offer either verbally or through a contract until I
1 pages (250 words) Coursework
U5 Case
hich is helpful if both Windows Server 2008 and Windows Vista Enterprise are available through SSH (secure shell), the company’s printers, and stations (Rux, 2012). Spiceworks is also a utility with an integral emphasis on community to solve issues quickly. With a properly
1 pages (250 words) Coursework
Case Study
The poor HR practices also acted as a factor that contributed to the work motivation challenges in the organization. This is because; the HR function of the organization was decentralized into different divisions, causing the different divisions
1 pages (250 words) Coursework
Case analysis
For that reason, according to Plato, you should not destroy the revised will because destroying the will means that you have not acted in a virtuous way, i.e. you conceal the truth by destroying the will;
1 pages (250 words) Coursework
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation