Item$2$

$0\mathrm{.}83$points

Time Remaining $1$ hour $26$ minutes $55$ seconds

$01$:$26$:$55$

Item $2$

Time Remaining $1$ hour $26$ minutes $55$ seconds

$01$:$26$:$55$

In $2025,$ the Robinson Company switched its inventory method from FIFO to average cost. Inventories at the end of $2024$ were reported in the balance sheet at $$22$ million. If the average cost method had been used, $2024$ ending inventory would have been $$20$ million. Ending inventory in $2025$ is $$23$ million using average cost, and would have been $$26$ million if the company had not switched from the FIFO method. The company's tax rate is $25\%.$ The effect of the change in method on $2025$ income before taxes is a:

Multiple Choice

$$2$ million decrease.

$$3$ million increase.

$$1$ million decrease.

$$1$ million increase.