DownTown Corp. uses a Periodic LIFO method to account for 100% of its inventory. In its most recent annual report, DownTowns Balance Sheet contained the following information:

Dec. 31, 2017 Dec. 31, 2018

Inventory $ 25,000,000 $ 24,000,000

DownTowns Inventory Footnote appeared as follows:

"Downtown uses LIFO to account for all inventory. The amounts reported

on the Balance Sheet for Dec. 31, 2017 and Dec. 31, 2018 are $ 5,000,000 and

$ 6,300,000, respectively, less than the replacement cost of the inventory.

Further, during 2017 there was a reduction in the certain inventories which

resulted in an increase in pre-tax income of $ 500,000.

A. (1) If DownTown corporation would have used FIFO to account for their

inventory (rather than LIFO), their Pre-Tax Income for 2017 would have been

$ ______________ (fill in an amount) HIGHER / LOWER (circle one) than

the Pre-Tax Income that they reported under LIFO.

B.(1) If DownTown has a tax rate of 40%, what is the cumulative tax savings that

DownTown has realized through December 31, 2017 as a result of using LIFO?