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 Don't use plagiarized sources. Get Your Custom Essay on what is the effect on income before income taxes in 2008 of a change to the lifo met 610585 Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! Just from $10/Page | 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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