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Basic Costing FIFO, LIFO, AVCO

HannahLMXHannahLMX Registered Posts: 1
I need help!! I have no idea how to calculate FIFO, LIFO or AVCO at all no matter how many times it's explained,
I just cant wrap my head around it!
Could someone please help me out and explain it in a simple way? Thank you!


  • stevefstevef Well-Known CarmarthenRegistered Posts: 258
    FIFO - First In First Out assumes that stock will be issued in rotation, so you always issue the oldest stock. Issues will be valued at the oldest price you have purchased stock at and stock balances valued at newest prices.

    So if opening stock comprises of 2 @ £2, 2 @ £3 and 2 @£4, purchased in that order. If you issue 3 items of stock, the issue will be valued at 2 @ £2 and 1 @ £3 = £7. The remaining items in store will be valued at [email protected]£3 and 2 @ £4 = £11.

    LIFO - Last In First Out assumes you always issue the most recently received first. So assuming the same opening stock, an issue of three will be valued at 2 @ £4 and 1 @ £3 = £11. The remaining stock is valued at 1 @ £3 and 2 @ £2 = £7.

    AVCO is an average, can be weighted or simple. Given same opening stock, the total value is £18, an average value of £3 each. So the issue of 3 will be valued at £9, with the value of the remaining stock being £9.
  • Nicola2Nicola2 Registered Posts: 6
    My tutor gave us a table to fill in so we could actually see the balances carrying over month to month and the issues as they came in. Made it much clearer. I can scan it in and email it to you if you like?
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