INVENTORY COSTING METHOD

Mohammad Faisal Nadeem

 INVENTORY COSTING METHODS

1. First in First Out

2. Last In First Out
3. Average Costing Method
FIRST IN FIRST OUT
FIFO
 NOVEMBER 1: BALANCE 100 UNITS @ RS. 4 PER UNIT

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

 NOVEMBER 5: RECEIVED 500 UNITS @ RS. 5 PER UNIT

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 100 4 400

500 5 2500
 NOVEMBER 8: SOLD 200 UNITS

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 100 4 400

500 5 2500

8/11 100 4 400

100 5 500 400 5 2000

 NOVEMBER 9: SOLD 200 UNITS

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 100 4 400
500 5 2500
8/11 100 4 400
100 5 500 400 5 2000

9/11 200 5 1000 200 5 1000

 NOVEMBER 10: RECEIVED 500 UNITS@ RS. 6

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 100 4 400
500 5 2500
8/11 100 4 400
100 5 500 400 5 2000

9/11 200 5 1000 200 5 1000

10/11 500 6 3000 200 5 1000
500 6 3000
 NOVEMBER 13: RECEIVED 500 UNITS@ RS. 7

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 100 4 400
500 5 2500
8/11 100 4 400
100 5 500 400 5 2000

9/11 200 5 1000 200 5 1000

10/11 500 6 3000 200 5 1000
500 6 3000
13/11 500 7 3500 200 5 1000
500 6 3000
500 7 3500
 NOVEMBER 18: SOLD 600 UNITS

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount
1/11 100 4 400
5/11 500 5 2500 100 4 400
500 5 2500
8/11 100 4 400
100 5 500 400 5 2000
9/11 200 5 1000 200 5 1000
10/11 500 6 3000 200 5 1000
500 6 3000
13/11 500 7 3500 200 5 1000
500 6 3000
500 7 3500
18/11 200 5 1000 100 6 600
400 6 2400 500 7 3500
 NOVEMBER 25: SOLD 400 UNITS

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount
500 5 2500
8/11 100 4 400
100 5 500 400 5 2000
9/11 200 5 1000 200 5 1000
10/11 500 6 3000 200 5 1000
500 6 3000
13/11 500 7 3500 200 5 1000
500 6 3000
500 7 3500
18/11 200 5 1000 100 6 600
400 6 2400 500 7 3500
25/11 100 6 600 200 7 1400
300 7 2100
1400 8000
LAST IN FIRST OUT
LIFO
 NOVEMBER 1: BALANCE 100 UNITS @ RS. 4 PER UNIT

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

 NOVEMBER 5: RECEIVED 500 UNITS @ RS. 5 PER UNIT

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 100 4 400

500 5 2500
 NOVEMBER 8: SOLD 200 UNITS

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 100 4 400

500 5 2500

8/11 200 5 1000 100 4 400

300 5 1500
 NOVEMBER 9: SOLD 200 UNITS

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 100 4 400
500 5 2500
8/11 200 5 1000 100 4 400
300 5 1500

9/11 200 5 1000 100 4 400

100 5 500
 NOVEMBER 10: RECEIVED 500 UNITS@ RS. 6

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 100 4 400
500 5 2500
8/11 200 5 1000 100 4 400
300 5 1500

9/11 200 5 1000 100 4 400

100 5 500
10/11 500 6 3000 100 4 400

100 5 500

500 6 3000
 NOVEMBER 13: RECEIVED 500 UNITS@ RS. 7

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount
1/11 100 4 400
5/11 500 5 2500 100 4 400
500 5 2500
8/11 200 5 1000 100 4 400
300 5 1500

9/11 200 5 1000 100 4 400

100 5 500
10/11 500 6 3000 100 4 400
100 5 500
500 6 3000
13/11 500 7 3500 100 4 400
100 5 500
500 6 3000
500 7 3500
 NOVEMBER 18: SOLD 600 UNITS

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount
1/11 100 4 400
5/11 500 5 2500 100 4 400
500 5 2500
8/11 200 5 1000 100 4 400
300 5 1500
9/11 200 5 1000 100 4 400
100 5 500
10/11 500 6 3000 100 4 400
100 5 500
500 6 3000
13/11 500 7 3500 100 4 400
100 5 500
500 6 3000
500 7 3500
18/11 500 7 3500 100 4 400
100 6 600 100 5 500
400 6 2400
 NOVEMBER 25: SOLD 400 UNITS
Date Received Sold/Used Balance
Units Rate Amount Units Rate Amount Units Rate Amount
1/11 100 4 400
5/11 500 5 2500 100 4 400
500 5 2500
8/11 200 5 1000 100 4 400
300 5 1500
9/11 200 5 1000 100 4 400
100 5 500
10/11 500 6 3000 100 4 400
100 5 500
500 6 3000
13/11 500 7 3500 100 4 400
100 5 500
500 6 3000
500 7 3500
18/11 500 7 3500 100 4 400
100 6 600 100 5 500
400 6 2400
25/11 400 6 2400 100 4 400
100 5 500
1400 8500 200 900
AVERAGE COSTING METHOD
 NOVEMBER 1: BALANCE 100 UNITS @ RS. 4 PER UNIT

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

 NOVEMBER 5: RECEIVED 500 UNITS @ RS. 5 PER UNIT

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 600 4.83 2900

 NOVEMBER 8: SOLD 200 UNITS

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 600 4.83 2900

8/11 200 4.83 967 400 4.83 1933

 NOVEMBER 9: SOLD 200 UNITS

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 600 4.83 2900
8/11 200 4.83 967 400 4.83 1933
9/11 200 4.83 967 200 4.83 966
 NOVEMBER 10: RECEIVED 500 UNITS@ RS. 6

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 600 4.83 2900

8/11 200 4.83 967 400 4.83 1933

9/11 200 4.83 967 200 4.83 966

10/11 500 6 3000 700 5.66 3966

 NOVEMBER 13: RECEIVED 500 UNITS@ RS. 7

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 600 4.83 2900

8/11 200 4.83 967 400 4.83 1933

9/11 200 4.83 967 200 4.83 966

10/11 500 6 3000 700 5.66 3966

13/11 500 7 3500 1200 6.22 7466

 NOVEMBER 18: SOLD 600 UNITS

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount

1/11 100 4 400

5/11 500 5 2500 600 4.83 2900

8/11 200 4.83 967 400 4.83 1933

9/11 200 4.83 967 200 4.83 966

10/11 500 6 3000 700 5.66 3966

13/11 500 7 3500 1200 6.22 7466

18/11 600 6.22 3733 600 6.22 3733

 NOVEMBER 25: SOLD 400 UNITS

Received Sold/Used Balance

Date Units Rate Amount Units Rate Amount Units Rate Amount
1/11 100 4 400
5/11 500 5 2500 600 4.83 2900
8/11 200 4.83 967 400 4.83 1933
9/11 200 4.83 967 200 4.83 966
10/11 500 6 3000 700 5.66 3966
13/11 500 7 3500 1200 6.22 7466
18/11 600 6.22 3733 600 6.22 3733
25/11 400 6.22 2489 200 6.22 1244
1400 8156
 COMPARISON

Consumption Closing Inventory

Method
Amount
Units Amount Units
s
FIFO 1400 8,000 200 1,400

LIFO 1400 8,500 200 9,00

Average Costing Method 1400 8,156 200 1,244

 INVENTORY CALCULATION
FORMULA

Inventory (Material) Used= Opening Inventory +

Purchases-Discounts/Return-Closing Inventory