# FIFO METHOD Formula

Q: WHAT IS THE FORMULA FOR FIFO METHOD WHEN CALCULATING THE VALUE OF THE CLOSING INVENTORY?

A:
The answer to this question has been brilliantly answered further below by Shivam, who has made use of a nice example to show us the FIFO Method formula and how it works.

Well done and thank you for enlightening fellow accountants around the world!

Related Questions & Tutorials:
Return to the main tutorial on FIFO and LIFO Accounting and the Weighted Average Cost Method

### Comments for FIFO METHOD Formula

 Inventory Valuation by: Anonymous I am grateful for this kind of opportunity. I thank you for a good job, well done. Pls I still find it difficult to understand the way the methods are used, especially in forming the table. I want to ask if there is a way to make it simpler using the FIFO, LIFO and average methods. Kindly do it please to help me understand, thank you.Hi there, the best thing is to check out my full tutorial on Inventory Accounting Methods: FIFO and LIFO Accounting, Weighted Average Method. The tutorial includes a full example for each of the inventory methods.Good luck!Best,MichaelFounder of Accounting Basics for Students

 layout format by: Anonymous i am very much worried about the layout formats of these stock valuation methods because what i just saw is that they look almost the same, so if you can further distinguish format for the three please

 FIFO Method Formula by: Shivam Shrivastava The formula is very simple...You calculate the total closing stock [(purchases + opening stock in quantity) - total issued in quantity] * Rate of last purchases. Example: 01-01-2014 OPENING STOCK 250 UNITS @ \$20 each. 05-01-2014 Purchased 500 units @ \$25 each. 07-01-2014 Issued 300 units 10-01-2014 Purchased 600 units @ \$18 each 15-01-2014 Issued 1000 units.VALUE OF CLOSING STOCK: Total purchases + opening stock = 1350 Units Total issued = 1300 Units So, REMAINING UNITS = 50 Units Value of remaining units = 50 * Rate of last purchase = 50 * \$18 = \$900