The accountant at Landry Company is figuring out the difference in income taxes the company will pay depending on the choice of either FIFO or LIFO as an inventory costing method.The tax rate is 30% and the FIFO method will result in income before taxes of $17,480.The LIFO method will result in income before taxes of $16,200.What is the difference in tax that would be paid between the two methods?
A)$1,280
B)$896
C)$384
D)Cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

The difference in income before taxes between FIFO and LIFO is $1,280 ($17,480 - $16,200). The difference in tax is 30% of this amount, which is $384 ($1,280 * 0.30).

The Accountant at Landry Company Is Figuring Out the Difference