(FIFO and LIFO) Harrisburg Company is considering changing its inventory

(FIFO and LIFO) Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings. However, the management wishes to consider all of the effects on the company, including its reported performance, before making the final decision. The inventory account, currently valued on the FIFO basis, consists of 1,000,000 units at $8 per unit on January 1, 2012. There are 1,000,000 shares of common stock outstanding as of January 1, 2012, and the cash balance is $400,000. The company has made the following forecasts for the period 2012–2014.201220132014Unit sales (in millions of units)1.11.01.3Sales price per unit$10$12$12Unit purchases (in millions of units)1.01.11.2Purchase price per unit$8$9$10Annual depreciation (in thousands of dollars)$300$300$300Cash dividends per share$0.15$0.15$0.15Cash payments for additions to and replacement ofplant and equipment (in thousands of dollars)$350$350$350Income tax rate40%40%40%Operating expenses (exclusive of depreciation) as apercent of sales15%15%15%Common shares outstanding (in millions)111Instructions(a) Prepare a schedule that illustrates and compares the following data for Harrisburg Company under the FIFO and the LIFO inventory method for 2012–2014. Assume the company would begin LIFO at the beginning of 2012.(1) Year-end inventory balances. (3) Earnings per share. (2) Annual net income after taxes. (4) Cash balance. Assume all sales are collected in the year of sale and all purchases, operating expenses, and taxes are paid during the year incurred.(b) Using the data above, your answer to (a), and any additional issues you believe need to be considered, prepare a report that recommends whether or not Harrisburg Company should change to the LIFO inventory method. Support your conclusions with appropriate arguments.