Analysis of annual report; usage of LIFO. The notes to the financial statements in an annual report of Sears, Roebuck, and Company contained the following statement: "If the physical quantity of goods in inventory at [year-end and the beginning of the year] . . . were to be replaced, the estimated expenditures of funds required would exceed the amounts reported by approximately \(\$ 670\) million and \(\$ 440\) million, respectively." Sears uses LIFO.

a. How much higher or lower would Sears's pretax reported income have been if it had valued inventories at current costs rather than with a LIFO cost flow assumption?

b. Sears reported \(\$ 606\) million net income for the year. Assume tax expense equal to 34 percent of pretax income. By what percentage would Sears's net income have increased if a FIFO cost flow assumption had been used?