FIFO valuation

[subhash_kulkarni2]

Dear experts,

Kindly explain how the system calculates FIFO Valuation for single receipt.

FIFO Valuation Based on Single Receipts

When you use single receipts as a basis, the system splits up the values from invoices among the goods receipts in chronological order on a progressive quantity fill-up basis.

Quantity

Value

FIFO receipt value

1st goods receipt

20 pieces

200.00

= $240.00

2nd goods receipt

80 pieces

800.00

= $860.00

The FIFO value of the two goods receipts is calculated as follows:

$200.00 + (20 pieces x $100.00 / 50 pieces) = $240.00 or

$800.00 + (30 pieces x $100.00 / 50 pieces) = $860.00

The FIFO value of the closing stock is thus 30 pieces x $860.00 / 80 pieces = $322.50.

[Former Member · Accepted solution]

Dear,

As I Understood, Please check Below:

See the above table which not posted in your question.

PO raised for 100 Pcs @ 10 $ each...

1st Goods received 20 pcs @ 200 $ (basing on PO price 10$ each)

2nd Goods receipt 80 pcs @ 800 $ (basing on PO price 10$ each)

Hope the above is clear...

Invoice received for 50 pcs @ 12 $ each (that means 2 dollar extra for each item compare with Purchase order price), the extra amount of 100 $ is posted to stock at the time of Invoice posting)

-

---

Now rest is : Goods issue is 70 Pcs

Closing stock 30 pcs (out of 100 pcs goods receipts)

If you take periodic FIFO calculation: 1100 for 100 pcs (that is considering both PO price 10 $ and Extra 2 $ invoice receipt price).

Basing on this above Closing stock value for 30 pcs = 30 pcs x 1100 $ / 100 pcs = which coming 330 $ (for 30 pcs).

_______________

If you take single base as FIFO valuation:

For 20 pcs = $ 240 (this value including 50 pcs Invoice receipt difference)....... OK

For the rest 80 pcs = 860 $ (this including only 30 pcs price variance basing on Invoice. Because already you included 20 pcs in above calculation. So out of 50 pcs invoice, 20 pcs you included above and remaining is only 30 pcs. So its takes the calculation of 30 pcs difference plus rest as you mentioend in your formula).

_______________

Regards,

Syed Hussain.