P-31: Inflation and inventory accounting effect (LO5) The Canton Corporationshows the following incomestatement (below). The firm uses FIFO inventory accounting a) Assume in 20X2 that the same 17,600 -unit volume is maintained, but that the sales price increases by 10 percent. Because of Fifo inventory policy, old inventory willstill be charged off at $7 per unit. Also assume selling and administrative expense will be 5 percent of sales and depreciation Will be unchanged. The tax rate is 30 peicent. Compute aftertax income for 202. b) Inpart a, twwhat percent did aftertax income increase as a result of a 10 percent increase in the sales price? Explain why this impact tookplace. c) Now assume that in 203 the volume remainsconstant at 17,600 units, but the sales price decreases by 15 percent from its year 202 level. Also, because of Fifo inventory policy, cost of goods sold reflects the inflationary conditions of the prior year and is $7.50 per unit. Further, assume selling and administrative expense will be 5 percent of sales and depreciation will be unchanged. The tax rate is 30 percent. Compute the aftertax income