Culverson Manufacturing Had Sales of $150 Million Last Year

Multiple Choice

Culverson Manufacturing had sales of $150 million last year. It is deciding whether to use FIFO or LIFO to value its inventory costs. If FIFO is used, the inventory cost is $120 million, but if LIFO is used, the inventory cost is $132 million. The firm's marginal tax rate is 40 percent. If the LIFO method is used over the FIFO method, what is the change in net inflow the company realizes?

A) +$2.6 million
B) +$3.8 million
C) +$4.8 million
D) +$6.2 million
E) +$7.6 million