Chide Inc. changed its inventory method to LIFO e$$ective January $1.$ During December, Chide$$s storage facility was shut down due to a strike resulting in a drastic reduction in inventory. The following data are available.

UnitsUnit CostBeginning inventory $($Base layer of LIFO$$January $1)28,000$$$1\mathrm{.}00$Inventory purchases during the year$630,0001\mathrm{.}25$Total cost of goods sold available for sale$658,000$Goods sold $($valued on a LIFO basis$)$ from:Purchases layer$630,0001\mathrm{.}25$Base inventory layer$14,0001\mathrm{.}00$Total cost of goods sold$644,000$Ending inventory $($December $31)14,000$

a$.$ What is the e$$ect of the LIFO liquidation on after$-$tax pro$$t or loss assuming a $25\%$ tax rate?

$Answer $1$ Answer $2$Decrease to after tax profitIncrease to after tax profit

b$.$ What is the accounting explanation for LIFO liquidation?

Answer $3$Due to higher cost inventory matched to current selling price which has decreased over time.Due to higher cost inventory matched to current selling price which has increased over time.Due to lower cost inventory matched to current selling price which has decreased over time.Due to lower cost inventory matched to current selling price which has increased over time.