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Difference between FIFO vs Standard?

In the inventory: what is the difference between:

Valuation Method: FIFO vs Standard?

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  • Best Answer
    author's profile photo Former Member
    Former Member
    Posted on Oct 19, 2007 at 12:37 AM

    Hi Tom,

    FIFO stands for First In First Out. The Inventory COGS is booked based on the value for that quantity in the order of receipt.

    Example:

    I will explain to you with an example of item A

    Let us say you receive Item A at the following prices

    A 10 units $10

    A 20 units $12

    When you sell A the first 10 units will book to COGS at $10 and the rest will book at $12.

    Standard means fixed cost defined in the Item Master. So every time a Receipt or Delivery transaction is made the Cost of the Item will get booked to G/L at the Standard Cost. If you Purchase price is higher than the Cost defined the difference will get posted to Inventory Variance Account. Same is the case on the Delivery side.

    Let me know if you need further assistance on this

    Suda

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  • Posted on Oct 19, 2007 at 01:13 AM
    -1

    Hello,

    This seems like primary school student question and has been answered by primary school teacher.

    I suggest you to take a course or training regarding with valuation method like FIFO, LIFO, FEFO, Moving average, weighted average, specific and standard.

    Are you end user, SAP consultant or a villager?

    Tell me more specific about your question. What was the challenge that made you raised it.

    Rgds,

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