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You have been assigned an important company-saving task. Based on your analysis of all the products you currently sell, which ones will you keep? Are there any that need to be eliminated? Would altering your choice of inventory cost flow help any of your products? Would there be an advantage to introducing a new product line? Please compose a memo to the company president that answers these questions and provide any other relevant information (especially that which shows your inventory knowledge!)

Product #1 (FIFO) Units Unit Cost

Beginning Inventory 10 $6.00

Purchase #1 5 $5.00

Purchase #2 5 $7.00

Product #2 (LIFO) Units Unit Cost

Beginning Inventory 12 $5.00

Purchase #1 5 $5.00

Purchase #2 3 $6.00

Product #3 (FIFo) Units Unit Cost

Beginning Inventory 6 $4.00

Purchase #1 2 $8.00

Purchase #2 5 $7.00

Ending Inventory counts reveal the following levels on hand at the end of the period: Product #1 8 Product #2 10 Product #3 7

Your sales team has informed you of sales revenue for the month also: Product #1 $97 Product #2 $103 Product #3 $118

First, calculate cost of goods sold for each product based on the information above. Then analyze gross profit (Sales revenue less costs of goods sold). This will help you get started on the information you need to draft your memo to the president.

Deliverables: Calculations of cost of goods sold for each product. Calculations of gross profit for each product. Memo with analysis, explanations and recommendations.

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