Response to the following questions:
1. Why does LIFO result in a very unrealistic ending inventory figure in a period of rising prices?
2. The cost of inventory at the close of the calendar year of the first year of operation is $40,000, using LIFO inventory, resulting in a profit before tax of $100,000. If the FIFO inventory would have been $50,000, what would the reported profit before tax have been? If the average cost method would have resulted in an inventory of $45,000, what would the reported profit before tax have been? Should the inventory costing method be disclosed? Why?