During 2007, Henry Sam Company experienced a significant increase in the rate of gross profit on sales, compared with the rate it has averaged in recent years. You are asked to determine the most likely reason for this improvement. Support your answer.
The following data are from the records of the company:
- 2007 sales (at an average price of $40 a unit) were $1,800,000.
- 2007 purchases (at an average cost of $24 a unit) were $960,000.
- The company uses the LIFO inventory method and has used it since 1982.
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