During 19X7, R Company, your client, changed its method, effective January 1, 19X7, of computing inventory cost from the average cost method to the last-in, first-out method. This change had the effect of reducing net income for the year ended December 31, 19X7 by \(\$ 300,000(\$ 0.26\) per share \()\), a material amount.

a. How can the company justify the change in inventory pricing as required by APB Opinion No. 20 ?

b. Draft the audit report that you will issue, assuming that you are otherwise satisfied with the financial statements.