Big Fish, Inc., inventory records for a particular development program show the following at July 31:
Data Table
Jul 1: Beginning Inventory..................... 9 units @ $165
July 15: Purchased .............................. 5 units @ $166
July 26: Purchased.............................. 13 units @ $175
At July 31, eleven of these programs are on hand. Big Fish calculated it's cost of goods sold using LIFO at $2,773 and it's cost of goods sold using FIFO $2,665.
Requirement 1:
Sales revenue is $9,200, operating expense are $1,700 and the income tax rate is 40%. How much in taxes would Big Fish Inc., save by using the LIFO method versus FIFO ?
Difference in methods..............?
x Income tax rate....................?
Tax savings using LIFO..................?