First in first out or fifo, Cost Accounting

Assignment Help:

First in First Out or FIFO

FIFO method is based upon the assumption such stock purchased first is issued first. Prices of stock purchased first are employed to determine the value or cost of inventory issued.  Closing stocks are carried on the latest costs.

Advantages

1. This is a realistic system: as oldest items are generally issued first out.

2. Unrealized losses or profits do not happen

3. This is easy to calculate whether prices of materials don't fluctuate

4. Such closing stocks values reflect the latest costs hence tend to reflect the recent market values.

5. This is acceptable to many tax authorities and is consistent also along with accounting practices as like IAS/IFRS.

Disadvantages

1. It includes tedious calculations whether the price of materials fluctuate from time to time

2. The product costs, based upon the oldest material prices, lag behind recent conditions especially into inflationary markets. 

3. Comparison about one job along with another may be difficult whether materials are issued on various prices.


Related Discussions:- First in first out or fifo

Equity adjustment account, Partner A (50%) Partner B (50%) sharing profi...

Partner A (50%) Partner B (50%) sharing profits equally New partner introduced $13,000 total cash including $3000 as goodwill which is raised to its full value. Partner C

Cost acunting, Weston Corporation manufactures a product that is available ...

Weston Corporation manufactures a product that is available in both a deluxe and a regular model. The company has made the regular model for years; the deluxe model was introduced

Standard cost and standard costing, Standard Cost and Standard Costing ...

Standard Cost and Standard Costing To effectively control the costs of a certain organization, we require a yard stick to measure the real performance against. Traditionally,

Labour cost, labour cost related case study with solution

labour cost related case study with solution

Prepare the amortization schedule, Logan Corporation issued $800,000 of 8% ...

Logan Corporation issued $800,000 of 8% bonds on October 1, 2006, due on October 1, 2011. The interest is to be paid twice a year on April 1 and October 1. The bonds were sold to y

Cost accounting, raw an organization chart of any actual or hypothetical ma...

raw an organization chart of any actual or hypothetical manufacturing organization to show the position of management/cost accounting department within an organization and discuss

Overhead analysis, allocate the overheads to the three departments and do t...

allocate the overheads to the three departments and do the secondary allocation of service departments

#title.journal., conard transfered 10000 from her account to the business

conard transfered 10000 from her account to the business

Sensitivity analysis, Sensitivity Analysis The only certain thing is th...

Sensitivity Analysis The only certain thing is that nothing is sure thing. Cost structures can be anticipated to vary over the time period. Management should vigilantly analyze

Draw the demand curve of marginal benefit, The total demand (marginal benef...

The total demand (marginal benefit) curve for visiting Yosemite is as follows: Price = 5000-10*NumberOfTrips -10*TonsOfVisibleTrash. a. Suppose the quantity of trash=100 tons. D

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd