Question: AAA Hardware uses the LIFO method to value its inventory. Inventory at the beginning of the year consisted of 10,000 units of the companys one

AAA Hardware uses the LIFO method to value its inventory. Inventory at the beginning of the year consisted of 10,000 units of the companys one product. These units cost $15 each. During the year, 60,000 units were purchased at a cost of $18 each and 64,000 units were sold.

1. How much profit was created as a result of the partial liquidation of the company's beginning inventory layer, and how much additional tax was paid on this profit assuming a 25% tax rate?

2. How the company could have avoided paying this additional tax?

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