melc25melc25 New MemberPosts: 8Registered
Fifo, Lifo and Avco are relatively straightforwards, the hardest I would say is AVCO. FIFO is just whatever comes in first goes out first, lifo is whatever comes in first goes out last, and avco is weighted average. With a bit of practice they are really easy! I always try and visualize a stock room when doing them so makes it more realistic. With AVCO if you have 20 units at £5.00 (£100) and 50 units at £5.20 (£260) = 70 units worth 360 so on average a unit is £360/70 = £5.14 each. If you then had to issue 40 units, you would do it at this price, and be left with 30 units at this price.
If it was FIFO, you would be issuing 20 units at £5.00 and 20 at £5.20. If it were LIFO, it would be all 40 at £5.20 (left with 10 @£5.20 and 20 @£5.00 in stores).

Hope this is explainatory.


Sign In or Register to comment.