UK Airways Ltd is nearing the end of its first year of operations. The company made inventory purchases of €745,000 during the year as follows:

Sales for the year are 5,500 units for €1,500,000 of sales revenue. Expenses other than cost of goods sold and income taxes are €185,000. The directors of the company are undecided about whether to adopt the FIFO or the LIFO inventory valuation method (assuming there is a choice).
The company has storage capacity for 5,000 additional units of inventory. Inventory/stock prices are expected to stay at €160.00 per unit for the next few months. The directors are considering purchasing 1,000 additional units of inventory at €160.00 each before the end of the year.
They wish to know how the purchase would affect net income under both FIFO and LIFO. The income tax rate is 31%.
Requie:
1. To aid company decision-making, prepare statements of profit or loss under FIFO and under LIFO, both without and with the year-end purchase of 1,000 units of inventory at €160.00 per unit.
2. Compare net profits under FIFO without and with the year-end purchase. Make the same comparison under LIFO. Under which method does the year-end purchase have a greater effect on net profits?
3. Under which method can a year-end purchase be made in order to manage net profits?