Required1. Explain the theoretically appropriate method that Hanlon should use to account for the insurance costs on the raw materials while they were in transit from the supplier.2. a. Explain the amount at which Hanlon should report the raw materials inventory on its balance sheet. b. In general explain why the lower of cost or market rule is used to report inventory.3. Explain what would have been the effect on ending inventory and cost of goods sold had Hanlon used the LIFO inventory method instead of the average cost inventory method for the raw materials.