How Do You Take Inventory Using The FIFO Method?
Reviewing budgets to find ways to cut costs is a daily function for most businesses. Directors are constantly challenged to make up for lost revenue or improve gross profits. It’s not surprising that inventory on hand is always a topic of discussion. What is the minimal amount needed to run the business? Businesses use the FIFO method to further streamline costs. Determine if the price of the inventory being used is going up or down. This is crucial in deciding whether FIFO is appropriate for the organization. If prices are going up, the FIFO method works. If not, it may be wise to consider other options. Assume that prices will consistently rise. Do the research and look at the historical behavior on the prices of the inventory. Mark trends during certain periods to make the best estimate of how prices will perform in the future. Assign the oldest costs to the current inventory as it is sold. For example, if four pies cost $2 on Monday and five of the same kind of pie cost $8 on Thurs
