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Betty Company began operations in 2016 and uses the average cost method in costing its inventory. In 2017, Betty is investigating a change to the
Betty Company began operations in 2016 and uses the average cost method in costing its inventory. In 2017, Betty is investigating a change to the LIFO method. Before making that determination, Betty desires to determine what effect such a change will have on net income. Betty has compiled the following information: 2016 2017 Ending Inventory using: Average cost $180,000 $200,000 LIFO $180,000 110,000 Net income (computed using the average- cost method) 120,000 170,000 Assume a 40% tax rate. If Betty adopted LIFO in 2017, net income would be
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