You have just been hired as a consultant to Tangier Industries, a newly formed company. The company
president, John Meeks, is seeking your advice as to the appropriate inventory method Tangier should use to
value its inventory and cost of goods sold. Mr. Meeks has narrowed the choice to LIFO and FIFO. He has
heard that LIFO might be better for tax purposes, but FIFO has certain advantages for financial reporting to
investors and creditors. You have been told that the company will be profitable in its first year and for the
foreseeable future. Prepare a report for the president describing the factors that should be considered by
Tangier in choosing between LIFO and FIFO.

Sample Solution