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

306, creating a decision treeplan

creating a decision treeplan.

Labour cost, labour cost related case study with solution

labour cost related case study with solution

What are total fixed cost, Corporation has determined the contribution marg...

Corporation has determined the contribution margin ratio is 35% and the income tax rate is 40%. Required: A) Assume break-even volume in dollars is $1,500,000. What are total fixed

Cash, This is difficult to perceive cash maintained in the vault as an inve...

This is difficult to perceive cash maintained in the vault as an investment. Fairly, you would be thinking that if we invest cash, then how can cash itself be an investment? Howeve

Estimate total money using marginal and average tax rate, Thomas Crown expe...

Thomas Crown expects to earn the following stream of annual income for the next four years:- $41,000; $45,000; $38,000 and $50,000. Although he has adopted the Pay Yourself First s

Example of cash flow statement, 1. Shares were certified at a premium of Rs...

1. Shares were certified at a premium of Rs. 1.50' per share. 2. Throughout the year Taxation liability regarding of 2002 was Rs, 20,000 and paid. 3. Throughout the year, Rs.

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

Flexible budget, Prod 400000 DM cost $3 DL 24 moh v 1.80 F 4.50 products 35...

Prod 400000 DM cost $3 DL 24 moh v 1.80 F 4.50 products 35000 DMP12000lb@$11/lb DM use10450lb DL38500HR 880500 v moh64150 FMOH152000

Standard costs establish the minimum desirable costs, Standard Costs Establ...

Standard Costs Establish the Minimum Desirable Costs When actual costs incurred exceed or else are below the standard costs, we after that investigate the variances along with

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