FIFO Value Determination 

Use

The FIFO value is determined from all FIFO-relevant goods receipts.

You use the FIFO method to define the stock that is to be valuated again, for example, the closing stock from the previous month or previous year. Beginning with the appropriate period, the system adds up all the quantities of goods received for each period until the closing stock is reached. Then the system adds up the value of the goods received. The last value to be added is determined in relation to the last quantity added.

The sum of the values of the goods received is the FIFO value.

At the end of the fiscal year, there are 1,500 pieces of a material in stock. The following FIFO-relevant goods receipts were posted in the individual periods of the fiscal year:

Period

Quantity of goods received

Value of goods received

Price of goods received

01

100

1000

10.00

02

200

2050

10.25

03

50

525

10.50

04

150

1525

10.17

05

100

1050

10.50

06

250

2600

10.40

07

300

3300

11.00

08

200

2250

11.25

09

150

1650

11.00

10

200

2350

11.75

11

400

4600

11.50

12

300

3500

11.67

Total

2400

26400

 

 

The following table shows how the FIFO value is calculated:

Period

Quantity

Value

Totaled quantity

12

300

3500

300

11

400

4600

700

10

200

2350

900

9

150

1650

1050

8

200

2250

1250

7

250

2750

1500

Total

1500

17100

 

 

Thus the price of the material according to the FIFO valuation is 17100 / 1500 = $11.40.

As a comparison: If the closing stock of the previous year was zero and no goods issues were posted for the material in the current fiscal year, the moving average price of the material at the end of the year would be 26400 / 2400 = $11.00.

Alternatively, the system can determine the FIFO value based on single receipts. You configure this using the FIFO method as well.

Tolerances

In exceptional circumstances, it can be that the stock to be valuated for a material is greater than the total of the receipt quantities. Reasons for this can be that not all goods receipts were relevant for FIFO or that part of the material was received a long time ago.

You can configure how the system is to react to this type of exceptional situation:

Define the tolerance interval by entering the appropriate percentage rates.