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Question - Maxis Sdn Bhd is a local wheel trading company and started to operate at the beginning of year 2021. Now, they are considering which inventory methods should they implemented for their company. Based on the transaction record, the beginning inventory consists of 10,000 units at a cost of RM 80 each. A long the year, a total of 18,000 units were sold at RM 150 each and additional 20,000 units were purchased at a cost of RM85.
(a) Distinguish the effect of First in first out (FIFO), Last in last out (LIFO) and average cost on COGS.
(b) Suggest to Maxis Sdn Bhd which method will be best suit for them if they are interested to reduce their taxable income. Provide evidence and justify your answer.
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