Chapter 6, Problem 6.5S

(Learning Objective 2: Compare income tax effects of the inventory costing methods) This exercise should be used in conjunction with S6-4. Carson Print Supplies, Inc. is a corporation subject to a 25% income tax. Compute the company’s income tax expense under the average-cost, FIFO, and LIFO inventory costing methods. Which method would you select to (a) maximize income before tax and (b) minimize income tax expense?

Short Exercises S6-6 through S6-8 use the following data of Sandy Corporation: