How to value inventory with FIFO
First in, first out prices each issue at the oldest cost still in the store. Work through a month of receipts and issues.
Task 1First in, first out4 questions
FIFO stands for first in, first out. It treats the oldest items in the store as the first ones to be issued.
So an issue is priced at the cost of the oldest items still held. When those run out, the next oldest cost is used.
| Date | Movement | Boards | Cost each | Total cost |
|---|---|---|---|---|
| 1 Jun | Opening balance | 20 | 30.00 | 600.00 |
| 5 Jun | Receipt | 30 | 35.00 | 1,050.00 |
| 12 Jun | Issue to Cutting | 30 | ||
| 19 Jun | Receipt | 30 | 38.00 | 1,140.00 |
| 26 Jun | Issue to Cutting | 40 |
An issue is materials sent from the store to be used. A receipt is a delivery into the store.
Task 2The second issue and the closing inventory4 questions