Calculated Cost explained: First in First Out

Calculated Cost explained: First in First Out


  • Cost is calculated as the first inventory value brought in for an item. Meaning If you buy 10 @ $10 and then 15 @ $25, the cost of an item will be $10 until the first 10 are depleted. Then the cost will be $25. 
  • Many things can impact the timeline of FIFO 
  • Backdating documents 
  • Sales depleting inventory 
  • If our example we could buy 10 @ $10, then transfer 4 @ $10 at 4:30pm but then our sync runs and pulls in sales and we actually sold 10 @ $10 at 4:00pm. BC we are inserting adjustments prior to our transfer, the COGS will be $10. 
  • So what do you do? Back date transfers to allow for the incoming of hourly sales if needed. 







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