Heinz Company began operations on January 1, 2020, 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 2020 2021

FIFO $640,000 $ 712,000

LIFO 560,000 636,000

Net Income (computed under the FIFO method) 980,000 1,330,000

Based on the above information, a change to the LIFO method in 2021 would result in net income for 2021 of

a. $1,370,000.

b. $1,330,000.

c. $1,254,000.

d. $1,250,000.

ANSWER: c (need explanation)