FIFO Calculator
Calculate inventory value and COGS using First-In, First-Out method
Inventory Purchases
Batch #1
Batch #2
Batch #3
Sales Information
Maximum available: 450 units
FIFO Calculation Results
Cost of Goods Sold Breakdown
Ending Inventory Breakdown
FIFO Method: First items purchased are the first items sold
Ending Inventory: Total Inventory Value - Cost of Goods Sold
Key Insights
Example: FIFO Calculation
Inventory Purchases
Batch 1: 100 units @ $10/unit = $1,000
Batch 2: 150 units @ $12/unit = $1,800
Batch 3: 200 units @ $15/unit = $3,000
Total Inventory: 450 units worth $5,800
Selling 200 Units Using FIFO
First 100 units from Batch 1: 100 × $10 = $1,000
Next 100 units from Batch 2: 100 × $12 = $1,200
COGS = $2,200
Ending Inventory:
50 units from Batch 2: 50 × $12 = $600
200 units from Batch 3: 200 × $15 = $3,000
Ending Inventory Value = $3,600
Profitability Analysis
Selling Price: $25/unit
Revenue: 200 units × $25 = $5,000
COGS: $2,200
Gross Profit: $2,800 (56% margin)
Inventory Summary
FIFO vs Other Methods
Sells oldest inventory first. Higher ending inventory value during inflation.
Sells newest inventory first. Lower taxable income during inflation.
Uses average cost for all units. Smooths out price fluctuations.
FIFO Best Practices
Best for perishable goods and items with expiration dates
Reflects actual physical flow of most businesses
Results in higher net income during inflation
Ending inventory closely matches current market prices
Widely accepted under GAAP and IFRS standards
Understanding FIFO Inventory Valuation
What is FIFO?
First-In, First-Out (FIFO) is an inventory valuation method that assumes the first items purchased or produced are the first ones sold. This creates a natural flow that matches how most businesses actually manage their physical inventory.
How FIFO Works
- •Oldest inventory costs are assigned to Cost of Goods Sold first
- •Most recent costs remain in ending inventory
- •Matches physical flow for most perishable products
FIFO Advantages
Lower COGS leads to higher profits and ending inventory value closer to market prices
Encourages selling older stock first, reducing waste and obsolescence
Provides more accurate balance sheet representation of inventory value
FIFO Calculation Formula
Step 1: Calculate Total Inventory Value
= Σ (Units × Price per Unit) for all batches
Step 2: Calculate COGS (sell oldest first)
= Sum of (Units Sold × Cost) starting from first batch
Step 3: Calculate Ending Inventory
= Total Inventory Value - COGS
Impact on Financial Statements
Balance Sheet
Ending inventory reflects recent costs, providing current market value
Income Statement
Lower COGS during inflation increases gross profit and net income
Tax Implications
Higher profits may result in higher tax liability during inflationary periods