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Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,020 units at $36; purchases, 7,810 units at $38; expenses (excluding income taxes), $193,500; ending inventory per physical count at December 31, current year, 1,780 units; sales, 8,050 units; sales price per unit, $78; and average income tax rate, 32 percent.

2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)?