Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,060 units at $36; purchases, 7,860 units at $38; expenses (excluding income taxes), $193,200; ending inventory per physical count at December 31, current year, 1,720 units; sales, 8,200 units; sales price per unit, $75; and average income tax rate, 34 percent.

3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling?