Determine what the pre-tax income would be

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BC Co. began operations on January 1, 2019, and uses weighted average to cost its inventory. Management is considering a change to the FIFO 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 weighted average)            750,000              900,000

Problem 1: Determine what the 2020 pre-tax income would be if BC Co. changed to FIFO method of valuing its inventory.

Reference no: EM132969953

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