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First In, First Out Inventory (FIFO) Using the price of merchandise purchased first to calculate the cost merchandise sold first. Last In, First Out Inventory.

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Presentation on theme: "First In, First Out Inventory (FIFO) Using the price of merchandise purchased first to calculate the cost merchandise sold first. Last In, First Out Inventory."— Presentation transcript:

1 First In, First Out Inventory (FIFO) Using the price of merchandise purchased first to calculate the cost merchandise sold first. Last In, First Out Inventory (LIFO) Using the price of merchandise purchased last to calculate the cost merchandise sold first.

2 FIRST-IN, FIRST-OUT INVENTORY COSTING METHOD 5 1 3 42 3.Units Needed to Equal the Total Units on Hand 1. Total Units on Hand 4.Unit Price Times Fifo Units 2.Units from the Most Recent Purchase 5.Total Fifo Cost Lesson 22-2, page 578

3 LAST-IN, FIRST-OUT INVENTORY COSTING METHOD 5 1 3 4 2 3.Units from the Earliest Purchase 1. Total Units on Hand 4.Units Needed to Equal the Total Units on Hand 2.Beginning Inventory Units 5.Unit Price Times Lifo Units 6 6.Total Lifo Cost Lesson 22-2, page 579

4 WEIGHTED-AVERAGE INVENTORY COSTING METHOD 1 3.Cost of Ending Inventory 1. Total Cost of Inventory Available 2.Weighted- Average Price per Unit 3 2 Lesson 22-2, page 580

5 Cost of Merchandise Sold Cost of Merchandise Available - Inventory Method (FIFO, LIFO, Weighted Avg.) = Cost of Merchandise Sold

6 COMPARISON OF INVENTORY METHODS Lesson 22-2, page 581 *Make sure the same method is used for each fiscal period

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