Suppose Sonics Inc. just started business this period. The firm purchased 400 units during the period at various prices as follows: Required (assume the firm faces a marginal tax rate of 35%): a....

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

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.