The Everlasting Company act as wholesale distributors of Vitrim, a raw ingredient for a variety ofrubberised compounds. Opening stock of Vitrim on I January 1983 was 25000 litres at a cost of £1.20 each . Purchases during the year amounted to 100000 litres at a cost per litre of £ 1.25 followed by 95 000 litres at a cost per litre of £1.15. Sales of 200000 litres of Vitrim took place during the year. The company operates a periodic basis of stock valuation and stock control.

(a) Calculate the value of the closing stock at 31 December 1983 and the cost of goods sold during the year using the following bases of cost recognition:

(i) Fifo;

(ii) Lifo.

(b) Compare the relative merits of the two approaches to stock cost recognition using the information obtained in (a).