FIFO Calculator
This FIFO calculator will help you determine the value of your remaining inventoryInventoryInventory is a current asset account found on the balance sheet, consisting of all raw materials, work-in-progress, and finished goods that a company has accumulated. It is often deemed the most illiquid of all current assets - thus, it is excluded from the numerator in the quick ratio calculation. and cost of goods soldCost of Goods Sold (COGS)Cost of Goods Sold (COGS) measures the “direct cost” incurred in the production of any goods or services. It includes material cost, direct labor cost, and direct factory overheads, and is directly proportional to revenue. As revenue increases, more resources are required to produce the goods or service. COGS is often using the first-in-first-outFirst-In First-Out (FIFO)The First-In First-Out (FIFO) method of inventory valuation accounting is based on the assumption that the sale or usage of goods follows the same order in which they are bought. In other words, under the FIFO method, the earliest purchased or produced goods are removed and expensed first. The most recent costs remain method.
Here is a preview of CFI’s FIFO calculator below:
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FIFO Inventory Valuation
This FIFO calculator uses the first-in-first-out method of inventory valuation to come up with an ending inventory value as well as cost of goods sold. As the name implies, this method assumes that the first inventory items that are purchased are the first ones that are pushed out for sale. A practical example of this would be a grocery store. At grocery stores, produce that comes in first is sold first, otherwise, it would perish. Thus, the most recent costs are the ones that remain on the balance sheet while older ones are expensed first.
Consider the grocery store example mentioned earlier. Here is an example of the grocery store’s schedule of apple purchases:
- June 6, 2019: 100 apples purchased at $1.20/apple
- June 7, 2019: 100 apples purchased at $1.45/apple
- June 9, 2019: 100 apples purchased at $1.10/apple
If by June 10th, this grocery store sold 220 apples, what would its inventory value and COGS be?
We can calculate this by applying the FIFO method used in CFI’s FIFO calculator.
Following the schedule above, we can calculate the cost of the remaining apples and the cost of goods sold.
- June 6, 2019: 100 apples sold at $1.20/apple = $120 in COGS
- June 7, 2019: 100 apples sold at $1.45/apple = $145 in COGS
- June 9, 2019: 20 apples sold at $1.10/apple = $22 in COGS
Therefore, total cost of goods sold would be 120+145+22 = $287 and the remaining inventory value would be 80*1.1 = $88.
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