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View Full Version : How to compute the cost if inventory using fifo


neenie21
Jun 21, 2012, 10:11 AM
what is the ending inventory value for fuses using FIFO and LIFO ?

purchase
2/01 5000 @ $1.20

purchase
on 5/6 2500@$1.24

purchase date
9/18 1000 @ $1.33
quanity on hand as if 12/31
2481

pready
Jun 21, 2012, 10:32 AM
For FIFO your inventory will contain 1000 units from your 9/18 purchase date and 1481 units from your 5/6 purchase date.

For LIFO your inventory will contain 2481 units from your 2/01 purchase date.

You just need to figure out the costs of inventory for each purchase date and add the costs together to get your total inventory cost.

paraclete
Jun 21, 2012, 05:57 PM
I think Pready has just illustrated what a ridiculous system LIFO is

During the period 8500 units were purchased and at the close 2481 remain meaning that 6019 were sold. At an average sales rate of 16.5 units per day this means that 3067 units of those purchased on the second of January exited the inventory before the next purchase was made meaning that it is illogical that 2481 units of that purchase remain in inventory at best 1933 of those units could physically remain. By applying the methodology suggested by Pready you are assuming all sales were made in the second half of the year