What inventory costing method does dow chemical use

Assignment Help Financial Accounting

Reference no: EM132658885

The inventory footnote from The Dow Chemical Company's first quarter 2019 SEC report follows. The company also reports cost of goods sold for Q I of 2019 of $10,707 million.

Inventories, in millions	Mar. 31, 2019	Dec. 31, 2018
Finished goods................................................	$5,703	$5,640
Work in process .............................................	2,239	2,214
Raw materials.................................................	940	941
Supplies ..........................................................	891	880
Total ...............................................................	$9,773	$9,675
Adjustment of inventories to a LIFO basis ..	(265)	(415)
Total inventories..............................................	$9.508	$9,260

Question a. What inventory costing method does Dow Chemical use? As of Q1 of 2019, what is the effect on cumulative pretax income and cash flow of using this inventory costing method? (Assume a 30% average cumulative tax rate.) What is the effect on Q1 of 2019 pretax income and cash flow of using this inventory costing method, assuming a 21% tax rate?

Question b. Compute inventory turnover and average inventory days outstanding for Q1 of 2019. (How do we adjust the ratio for the number of days in a quarter instead of a year?) Comment on the level of these two ratios. Is the level what we expected?

Question c. Determine the FIFO values for inventories and cost of goods sold for Q1 of 2019. Recompute inventory turnover and DIO . Compare the ratios to those from part b. Which set of ratios would provide more useful analysis?

Question d. Explain why a reduction in the LIFO reserve increased income in Q1 of 2019.

Reference no: EM132658885

Questions Cloud

Identify any internal marketing needs : Identify all the issues pertaining to that internal organizational environment and Identify any internal marketing needs

What cost would be assigned to each product : Costs of batter and operating the baking machine are allocated on the basis of units of output then what cost would be assigned to each product?

Write overview of the creation and development of policing : Recently you were hired as a Historian for your city regarding the history of policing from England to the United States and its current state.

Explain management process and day-to-day management : Discuss the difference between the strategic management process and the day-to-day management of the organization.

What inventory costing method does dow chemical use : What inventory costing method does Dow Chemical use? As of Q1 of 2019, what is the effect on cumulative pretax income and cash flow of using this inventory cost

Analyze significance of characteristics of sexual deviance : Analyze the significance of two characteristics of sexual deviance that are applicable to the defendant. Next, based on the characteristics you deemed.

Air grievances and management : Amy's company takes employee satisfaction very seriously-it's not just another line in their mission statement. There is a monthly town

Inhabit the perspective of another : How fully is someone able to inhabit the perspective of another?

Explain his or her actions from point of view of violation : Explain his or her actions from the point of view of the violation of a social norm and identify the violated norm. Examine the factors that best explain how.

User Account

All Pages