Farhad is an accountant at Belamy Manufacturing Limited (BML). BML began operations on January 1, 2022, and uses FIFO to cost its inventory. Management is contemplating a change to the average cost method and is interested in determining what effect such a change will have on pre-tax income. Accordingly, Farhad developed the following information:

Based upon the above information, what would be the result (in terms of pre-tax income) from a change to the average cost method in 2022 for 2023?

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Ending Inventory 2022 2023 $ 480,000 $540,000 400,000 500,000 900,000 FIFO Average cost Pre-tax (calculated using FIFO) 750,000