Lodge, Inc. reported pretax book income of $5,000,000. During the year, the company increased its reserve for warranties by $200,000. The company deducted $50,000 on its tax return related to warranty payments made during the year. What is the impact on taxable income compared to pretax book income of the book-tax difference that results from these two events?

a. Favorable (decreases taxable income)

b. Unfavorable (increases taxable income)

c. Neutral (no impact on taxable income)