2) Lanier Company began operations on January 1, 2010, and uses the FIFO method

Question

2) Lanier Company began operations on January 1, 2010, 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 2010 2011
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 2011 would result in net income for 2011 of:
a) $600,000
b) $620,000
c) $660,000
d) $540,000

Explanation / Answer

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