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costs and prices regularly fall every year in the microcomputer industry. briefly indicate your recommendation and...

costs and prices regularly fall every year in the microcomputer industry. briefly indicate your recommendation and rationale for an inventory cost flow method for a firm about to enter this industry.
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The choice of accounting methods is both a management (political) and a financial decision. If themicrocomputer company in the given situation wishes to minimize its initially reported taxable income,then it should use FIFO. This is because FIFO assigns the most recent costs to ending inventory, andthe older costs (which are higher) to cost of goods sold. On the other hand, if the company wants tomaximize EPS and management bonuses the firm may choose LIFO, which would have the oppositeeffect on earnings.

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