Hannah Company began operations on January 1, 2008, and uses the FIFO method in costing its raw materials 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:
Based upon the above information, a change to the LIFO method in 2009 would result in net income for 2009 of
A) $540,000.
B) $600,000.
C) $620,000.
D) $660,000.

Question

Hannah Company began operations on January 1, 2008, and uses the FIFO method in costing its raw materials 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:
 Based upon the above information, a change to the LIFO method in 2009 would result in net income for 2009 of
A) $540,000. 
B) $600,000. 
C) $620,000. 
D) $660,000.

Quizplus · Accepted Answer

$600,000 - ($360,000 - $300,000) = $540,000.

Hannah Company Began Operations on January 1, 2008, and Uses