first-in-first-out cost

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A method of valuing units of raw material or finished goods issued from stock based on using the earliest unit value for pricing the issues until all the stock received at that price has been used up. The next latest price is then used for pricing the issues, and so on. Because the issues are based on a FIFO cost, the valuation of closing stocks is described as being on the same FIFO basis. The method may also be used in process costing to value the work in process at the end of an accounting period. Compare last-in-first-out cost; next-in-first-out cost.

Subjects: Accounting.

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