How to calculate cost of goods sold under the FIFO method?
Under the FIFO method, the first goods purchased are the first goods sold. Said another way, the oldest items in inventory are what the company wants to sell to the customer first.
For example, in the visual below, batch #1 would be considered the oldest units purchased, so those would be the first items sold out of inventory.
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What is FIFO in inventory accounting?
? FIFO stands for “first in, first out” and is one of the most common types of inventory management technique. Grocery stores are a great example of an industry in which FIFO is popular. It basically means that when they buy milk from a farmer, the oldest milk purchased is the first milk that is […]