Several years ago, General Motors reported the following in its inventory note:

In the current year, GM recorded a small pretax operating profit of S22.8 million.
Required: 1. Compute the amount of pretax operating profit (loss) that GM would have reported had it not reduced inventory quantities during the current year. 2. Compute the amount of pretax operating profit (loss) for the current year that GM would have reported had it employed FIFO accounting in both years. 3. What is the normal relationship between pretax operating profit computed using LIFO and FIFO when costs are rising? Why is this relationship not in evidence in this case?

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The cost of substantially all domestic inventories was determined by the last-in, first-out (LIFO) method. If the first-in, first-out (FIFO) method of inventory valuation had been used by the Corporation for U.S. inventories, it is estimated they would be $1,886.0 million higher at December 31. [current year] compared with $2.077.1 million at December 31, [prior year]. As a result of decreases in unit sales and actions taken to reduce inventories. certain LIFO inventory quantities carried at lower costs prevailing in prior years, as com- pared with the costs of current purchases, were liquidated.... These inventory adjustments favorably affected income (loss) before income taxes by approximately $305.0 million [current year].