What is the FIFO Cost Lot Tracking?
FIFO cost lot tracking, tracks your inventory based on ‘First In First out’ system that will enable you to assess the value of your inventory. This essentially means that the oldest inventory items are recorded as sold first irrespective of whether its actually done this way or not.
For e.g: Let’s say, Zylkar Corp. had the following inventory for a particular item - Item A at hand, in the order of purchase/acquisition in the month of August:
|Number of Items||Cost price|
Let’s assume, Zylkar Corp. sells 420 units during August. The company would expense the cost associated with the first 200 units at $50 and the remaining 220 units at $55.
Under FIFO method, the total cost of sales for August would be $22,100. The remaining inventory at hand would be calculated the following way:
|Number of Items||Price per Item||Total|
|Remaining 30 units||$55||$1650 ($55 x 30 units)|
|150 units||$59||$8850 ($59 x 150 units)|
Hence, the balance sheet would now show inventory for Item A valued at $10500.
You can access and run FIFO cost lot tracking reports for a preferred date range from the reports module under inventory reports.
To learn more about the FIFO Cost Lot Tracking report, click here.