The manager of Vaughn Company is given a bonus based on income before income taxes. Net income, after taxes, is $10900 for FIFO and $9200 for LIFO. The tax rate is 25%. The bonus rate is 15%. How much higher is the manager's bonus if FIFO is adopted instead of LIFO?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The manager of Vaughn Company is given a
bonus based on income before income taxes.
Net income, after taxes, is $10900 for FIFO
and $9200 for LIFO. The tax rate is 25%. The
bonus rate is 15%. How much higher is the
manager's bonus if FIFO is adopted instead of
LIFO?
Transcribed Image Text:The manager of Vaughn Company is given a bonus based on income before income taxes. Net income, after taxes, is $10900 for FIFO and $9200 for LIFO. The tax rate is 25%. The bonus rate is 15%. How much higher is the manager's bonus if FIFO is adopted instead of LIFO?
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