Dolo’s Building Block Company uses LIFO costing and reports the following information in a footnote to its financial statements:“If Dolo had used FIFO costing during 2000, the beginning and ending inventories would have been higher by $50 million and $70 million, respectively.”

Required

a. Determine how much higher or lower Dolo’s cost of goods sold would be during 2000 if the firm had used FIFO in costing its inventories.

b. Assume that all of Dolo’s income is taxed at 40%.How much higher or lower would Dolo’s income tax expense be during 2000 if the firm had used FIFO?

c. What was Dolo’s tax savings for the year due to the use of LIFO?

d. What was Dolo’s cumulative tax savings through the end of the year 2000?