First in First Out-FIFO Method Definition:
A method that operates under the
assumption that the materials which are received first are issued first
and, therefore, the flow of cost should be in the same order. Issues are
priced at the same basis until the first lot received is used up, after
which the price of next lot received becomes the issue price. Upon this
lot being fully used, the price of the still next lot is used for pricing
and so on. Under first in first out FIFO method, the materials issued are
priced at the oldest cost, while the materials, in hand are valued at the
latest cost.
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full article about first
in first out-FIFO-costing method with example.
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