First in First Out-FIFO Method Definition:
A method that operates under the assumption that the materials which are received first are issued first and, therefore, the flow of cost should be in the same order. Issues are priced at the same basis until the first lot received is used up, after which the price of next lot received becomes the issue price. Upon this lot being fully used, the price of the still next lot is used for pricing and so on. Under first in first out FIFO method, the materials issued are priced at the oldest cost, while the materials, in hand are valued at the latest cost. Click here to read full article about first in first out-FIFO-costing method with example.