Randall Corp. began operations on January 1, 2019, and uses FIFO to cost its inventory. Management is contemplating a change to the average cost method and is interested in determining what effect such a change will have on pre-tax income. Accordingly, the following information has been developed:

	Ending Inventory	2019		2020
	FIFO	$480,000		$540,000
	Average cost	400,000		500,000
	Pre-tax Income (calculated using FIFO)	750,000		900,000

Based upon the above information, a change to the average cost method in 2020 would result in pre-tax income for 2020 of

a) $940,000.

b) $790,000.

c) $860,000.

d) $980,000.