FIFO Costing Method

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.