The first in first out (FIFO) costing method of costing is used to introduce the subject of materials costing. The FIFO costing method of costing issued materials follows the principle that materials used should carry the actual experienced cost of the specific units used. The methods assumes that materials are issued from the oldest supply in stock and that the cost of those units when placed in stock is the cost of those same units when issued. However, FIFO costing may be used even though physical withdrawal is in a different order.
Process Costing System Addition of Materials, Average and FIFO Costing After studying this chapter you should be able to: In numerous industries, all materials needed for the product are put in process in the first department. However, additional materials might be required in subsequent
Definition and Explanation of Process Costing System: Cost accumulation procedures used by manufacturing concerns are classified as either job order costing or process costing. The Job Order Costing System chapter deals with the procedures applicable to job order costing. It is important to understand