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Hannah Company began operations on January 1, 2007, and uses the FIFO method in costing its raw material inventory. Management is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed:

Final Inventory 2007 2008
FIFO $320,000 $360,000
LIFO 240,000 300,000

Net Income (computed under the FIFO method) 500,000 600,000

Based upon the above information, a change to the LIFO method in 2008 would result in net income for 2008 of

A. $540,000.

B. $660,000.

C. $620,000.

D. $600,000.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9416701

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