Use the data for Cranwell Company in E6-18A to illustrate Cranwell's income tax advantage from using LIFO over FIFO. Sales revenue is $7,700, operating expenses are $1,400, and the income tax rate is 25%. How much in taxes would Cranwell Company save by using the LIFO method versus FIFO?
May 1 Beginning inventoryl ........................... 6 units® $150 = $ 900
15 Purchase ............................................... 4 units @ 151 = $ 604
26 Purchase ............................................. 14 units® 160 = $2,240