Suppose Sonics Inc. just started business this period. The firm purchased 400 units during the period at various prices as follows:

Date	Units	Unit Cost	Total
January	100	$10	$1,000
March	100	$12	$1,200
June	100	$14	$1,400
October	100	$15	$1,500
Total	400		$5,100

The firm sold 250 units at $30 each on the following dates:

Date	Units	Unit Price	Total Sales
February	75	$30	$2,250
May	90	$30	$2,700
August	75	$30	$2,250
December	10	$30	$300
Total	250	$30	$7,500

Required (assume the firm faces a marginal tax rate of 35%):

a. Calculate taxable income and taxes payable assuming the firm uses FIFO (first-in, first-out) for inventory costing purposes.

b. Calculate taxable income and taxes payable assuming the firm uses LIFO (last-in, first-out) for inventory costing purposes.

Discuss your results, including any nontax costs that might be associated with either inventory costing system.