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

Determine investment allocation that maximises expect npv, Suppose that $4 ...

Suppose that $4 million is available for investment in three projects.  The probability distribution of the net present value earned from each project depends on how much is invest

Pv ratio, Do I use the contribution per unit and the total sales for the de...

Do I use the contribution per unit and the total sales for the department in order to calculate the p/v ratio for a department

Estimate the selling price and profit, Slash and Burn is a monopolist that ...

Slash and Burn is a monopolist that can sell its output at these prices and with these total costs:                    Output             Price        Total Cost

Uses of funds, Dividends                                                   ...

Dividends                                                                                        ................ Non-operating losses not passed through P and L A/c

Calculate the variable overhead efficiency variance, Questions 8-10 rely on...

Questions 8-10 rely on the following data. FrontGrade Systems allocates manufacturing over- head based on machine hours. Each connector should require 11 machine hours. According t

Wages department, Wages Department It is accountable for the preparati...

Wages Department It is accountable for the preparation of the payroll and the payment of wages. The routine will need: a) Analysis of clock cards and verify of overtime aut

Cost component, Identify the individual cost components and the total cost ...

Identify the individual cost components and the total cost of delivering the product from supplier to retailer.   Identify each cost in terms of the incremental addition to the pro

Break-even analysis, Break-Even Analysis Break-even point is the volum...

Break-Even Analysis Break-even point is the volume of sales at that there is no loss or. Break-even charts graphically show the relationship of cost to profits and volume and

Material costs - cost accumulation, Material Costs - Cost Accumulation ...

Material Costs - Cost Accumulation However 'Materials' refer to the tangible inputs into the procedure of producing useful output.  They might be indirect materials or direct

Compute the annual depreciation charges, On January 1, 2012, a machine was ...

On January 1, 2012, a machine was purchased for $197,100. The machine has an estimated salvage value of $13,140 and an estimated useful life of 5 years. The machine can operate for

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