Use the data for Spear Corporation in E6-30B to illustrate Spear’s income tax advantage from using LIFO over FIFO. Sales revenue is $10,080, operating expenses are $800, and the income tax rate is 25%. How much in taxes would Spear Corporation save by using the LIFO method versus FIFO?

Data from E6-30B

Spear Corporation’s inventory records for its retail division show the following at May 31:

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10 units @ $160 5 units @ 161 14 units @ 170 May 1 Beginning inventory . $1,600 805 Purchase.. 15 26 Purchase. 2,380