Rousseau Company uses the periodic LIFO inventory estimation method. At the beginning of the current fiscal year, the company’s inventory consisted of the following:

These units were produced over several years, during which inventory costs had increased rapidly. During the current year, Rousseau produced 20,000 additional units of inventory at an average cost of 36 per unit. The average sales price of units sold during the year was 55.

Required Answer the following questions. A. What would be Rousseau’s gross profit and average gross profit per unit if it sold 20,000, 24,000, 28,000, or 36,000 units during the year?

B. Assume that Rousseau sold 36,000 units during the year. How many units would it need to produce to minimize the tax effect of its gross profit? How many units would it need to produce to maximize its gross profit?

C. If you were a manager of Rousseau and you wanted to control the amount of gross profit reported by the company, what could you do? If you wanted to develop an accounting standard that could prevent this type of management manipulation of income, what kind of standard might you propose?

Location, location, location can be the most important aspect to a business. Why? Where can your customers go to find you and your business? On the web? On a social media site? In a brick and mortar location? Where would you seek to be found with your ficticious business? Why do most entrepreneurs start out of their home? Amazon, HP, Dell, Uber began in the garage or in a dorm room. What are the benefits? Negatives? Can you do that with your business? Recognizing that many entrepreneurs are between 30-40 years old and employed full time, how do you go about creating your own business when you are employed and caring for a spouse or children? Can your home be a major distraction for you?