Henri Company uses the average-cost inventory method.Its 2010 ending inventory was €40,000, but it would have been €60,000 if FIFO had been used.Thus, if FIFO had been used, Henri's income before income taxes would have been

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Under FIFO, the cost of goods sold would be lower, leading to a higher income before taxes by the difference in ending inventory, which is €20,000.

Henri Company Uses the Average-Cost Inventory Method