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

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

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.

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Units Date January March June October Total Unit Cost $10 $12 $14 $15 Total $1,000 1,200 $1,400 $1,500 $5,100 100 100 Units Unit Price Total Sales Date February May August December5$30 Total 75 90 75 10 250 $30 30 430 $30 $2,250 2,700 $2,250 $300 7,500