what is the effect on income before income taxes in 2008 of a change to the lifo met 610585

Change in Inventory Cost Flow Assumption – The Berg Company began operations on January 1, 2007 and uses the FIFO method in costing its raw material inventory. During 2008 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:

2007

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2008

FIFO—Ending inventory

$240,000

$270,000

LIFO—Ending inventory

200,000

210,000

Income before income taxes (computed under the FIFO method)

120,000

170,000

Required

What is the effect on income before income taxes in 2008 of a change to the LIFO method?

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