Michelle Kwan Inc. sells two products: figure skates and speed skates. At December 31, 2008, Kwan used the first-in, first-out (FIFO) inventory method. Effective January 1, 2009, Kwan changed to the last-in, first-out (LIFO) inventory method. It is impracticable to determine the prior-year effects. As a result, the ending inventory of 2008 for which the FIFO method was used is also the beginning inventory for 2009 for the LIFO method. Any layers added during 2009 should be costed by reference to the first acquisitions of 2009 and any layers liquidated during 2009 should be considered a permanent liquidation. The following information was available from Kwan€™s inventory records for the 2 most recent years.

Instructions
Compute the effect on income before income taxes for the year ended December 31, 2009, resulting from the change from the FIFO to the LIFO inventorymethod.

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Skates Speed Skates Units 22,000 18,500 Units Unit Cost Unit Cost 2008 purchases January April 16 November 8 December 13 7,000 12,000 17,000 9,000 $40 45 54 62 $20 34 2009 purchases February 11 May 20 October 15 December 23 3,000 8,000 20,000 $66 75 81 23,000 $36 15,500 42 Units on hand December 31, 2008 December 31, 2009 15,100 18,000 15,000 13,200