Eleanor Copy Center sells laser printers and supplies. Eleanor Copy Center started the year with 90 containers of ink (average cost of $8.50 each, FIFO cost $8.90 each, LIFO cost of $7.80 each). During the year, Eleanor Copy Center purchased 720 containers of ink at $10.30 and sold 580 units for $19.75 each. Eleanor Copy Center paid operating expenses throughout the year, a total of $4,100. Eleanor Copy Center's income statement- excluding the effects of income tax under each of the average-cost, FIFO, and LIFO inventory costing methods-is given.
Eleanor Copy Center is a corporation subject to a 25% income tax. Compute Eleanor Copy Center's income tax expense under the average, FIFO, and LIFO inventory costing methods. Which method would you select to (A) maximize income before tax and (B) minimize income tax expense? (See Chart)
minimize Income tax expense? (Round your answer to the nearest Whole dollar.) FIFO Sales revenue Average Cost $ 11,455 $ 5,858 L IFO 11,455 $ 11,455 5,848 5,974 Cost of goods sold Gross profit $ 5,597 4,100 Operating expenses 5,607 $ 5,481 4,100 4,100 1,507 $ 1,381 Net income before tax 1,497 $ Income tax expense Enter any number in the edit fields and then click Check Answer.