FIFO for Inventories Calculator
Calculate ending inventory value and cost of goods sold (COGS) using the FIFO inventory valuation method. Free online FIFO calculator with batch-by-batch breakdowns and charts.
Inventory Batch 1
Inventory Batch 2
Inventory Batch 3 (Optional)
Sales Information
About This Calculator
The FIFO for Inventories Calculator helps businesses, accountants, and students compute the cost of goods sold (COGS) and ending inventory value using the First-In-First-Out (FIFO) inventory valuation method. Enter up to three inventory purchase batches with their quantities and unit prices, along with the total units sold, to get an instant, accurate FIFO calculation.
Under the FIFO method, the oldest inventory items are assumed to be sold first. This calculator applies the FIFO logic by consuming units from Batch 1 first, then Batch 2, and finally Batch 3 if needed. The COGS is calculated as the sum of the costs of the consumed units. The remaining units in each batch form the ending inventory, valued at their respective purchase prices. If you provide a selling price per unit, the calculator also shows total revenue, gross profit, and gross margin percentage.
Regional Notes
India: FIFO is mandatory under the Companies Act 2013 and Schedule III for inventory valuation. The calculator uses ₹ (INR) as default currency. Indian businesses must use FIFO for compliance with Indian Accounting Standards (Ind AS 2).
United States: FIFO is one of the two most common inventory methods under US GAAP (ASC 330). Companies may choose between FIFO and LIFO, but LIFO requires conformity for tax purposes. The calculator uses $ (USD) for US users.
United Kingdom: FIFO is the preferred method under FRS 102 and is consistent with IFRS requirements. The calculator uses £ (GBP) for UK users. UK businesses should use FIFO unless a different method provides a truer view.
Frequently Asked Questions
What is the FIFO method for inventory valuation?
FIFO (First-In-First-Out) is an inventory valuation method that assumes the first items purchased or produced are the first ones sold. This means the cost of goods sold (COGS) reflects older, typically lower costs, while ending inventory reflects more recent costs. FIFO is widely used under both IFRS and GAAP accounting standards.
How do you calculate COGS using FIFO?
To calculate COGS using FIFO, multiply the units sold by the cost of the oldest inventory batch first. For example, if you bought 100 units at ₹10 and then 150 units at ₹15, and sold 120 units, COGS = 100 × ₹10 + 20 × ₹15 = ₹1,300. The remaining 130 units form the ending inventory at the newer cost.
Is FIFO the same as LIFO?
No, FIFO (First-In-First-Out) assumes the oldest inventory is sold first, while LIFO (Last-In-First-Out) assumes the newest inventory is sold first. FIFO results in higher ending inventory value and lower COGS during inflation, while LIFO gives lower taxable income. LIFO is prohibited under IFRS but allowed under US GAAP.
Why use FIFO for inventory accounting?
FIFO provides a realistic flow of physical inventory since most businesses sell older stock first to avoid obsolescence. It results in higher net income during inflation because older cheaper costs are matched against current revenues. FIFO also produces higher inventory values on the balance sheet, which can improve financial ratios.
How does FIFO affect taxable profits?
During inflation, FIFO produces lower COGS and higher profits compared to LIFO, resulting in higher taxable income. In India, FIFO is mandatory under the Companies Act 2013 for inventory valuation. In the US, companies can choose FIFO or LIFO, but LIFO requires conformity in tax reporting. In the UK, FIFO is the preferred method under FRS 102.
What is the difference between ending inventory value and COGS?
Ending inventory value is the total cost of all unsold goods remaining at the end of an accounting period, calculated by summing the costs of remaining units at their purchase prices. COGS (Cost of Goods Sold) is the total cost of all units sold during the period. Together they account for the total inventory available for sale.
Can I use FIFO for any type of inventory?
FIFO is suitable for most types of inventory including raw materials, work-in-progress, and finished goods. It works best for perishable goods, fashion items, technology products, and any inventory where older stock should be sold first. FIFO is required under IFRS and is the most commonly used inventory method globally.
Does FIFO work with multiple purchase batches?
Yes, the FIFO calculator handles up to three inventory purchase batches. When selling units, the oldest batch is consumed first, then the next batch, and so on. This mirrors real-world inventory management where businesses purchase stock at different prices over time and sell the oldest stock first to minimize waste and obsolescence.