On January 1, 2020, Bluebird Ltd

question 12

Multiple Choice

On January 1, 2020, Bluebird Ltd. changed its inventory valuation method from weighted-average cost to FIFO for financial statement and income tax purposes, to make their reporting as reliable and more relevant. The change resulted in a $ 900,000 increase in the beginning inventory at January 1, 2020. Assume a 25% income tax rate. The cumulative effect of this accounting change reported for the year ended December 31, 2020 is

• A) $ 0.
• B) $ 225,000.
• C) $ 675,000.
• D) $ 900,000.

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Definitions:

Labor

The human effort, both physical and mental, used in the production of goods and services.

Average Product

The quantity of goods produced per unit of input, determined by dividing the overall output by the amount of input used.

Unit Of Input

A measurement of the amount of resources (labor, materials, etc.) used in the production of goods and services.