WindsorCompany is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings. However, management wishes to consider all of the effects on the company, including its reported performance, before making the final decision.

The inventory account, currently valued on the FIFO basis, consists of1,000,000units at $8per unit on January 1, 2020. There are1,000,000shares of common stock outstanding as of January 1, 2020, and the cash balance is $400,000.

The company has made the following forecasts for the period 2020-2022.

The company has made the following forecasts for the period 20202022. Unit sales {in millions of units) Sales price per unit Unit purchases (in millions of units) Purchase price per unit Annual depreciation (in thousands of dollars) Cash dividends per share Cash payments for additions to and replacement of plant and equipment (in thousands of dollars) Income tax rate Operating expenses (exclusive of depreciation) as a percent of sales Common shares outstanding (in millions) 2020 19 $10 18 $8 $300 $015 $350 40% 15% 1 2021 13 $12 19 $9 $300 $015 $350 40% 15% 1 2022 21 $12 20 $10 $300 $015 $350 40% 15%