last-in-first-out cost

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(LIFO cost)

A method of valuing units of raw material or finished goods issued from stock by using the latest unit value for pricing the issues until all the quantity of stock received at that price is used up. The next earliest price is then used for pricing the issues, and so on. Because the issues are based on a LIFO cost, the valuation of closing stocks is described as being on the same LIFO basis. The method may also be used in process costing to value the work in process at the end of an accounting period. This method of costing is not normally acceptable for stock valuation in the UK. Compare first-in-first-out cost; next-in-first-out cost.

Subjects: Business and Management.

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