FIFO Calculator for Inventory

The First-In, First-Out (FIFO) method relies on the chronological flow of inventory costs. When units are sold, their valuation is pulled starting from the earliest purchase batches until the total number of units sold is reached. The general revenue equation is Revenue = Units Sold * Sell Price. For cost tracking, COGS is calculated by summing the acquisition costs of the oldest available batches matching the exact quantity of units sold. Ending inventory is then derived by valuing the remaining unsold stock at the most recent purchase prices.

Imagine your boutique purchases t-shirts across two different batches. Batch 1 consists of 100 units purchased at $10.00 each. Batch 2 consists of 150 units purchased at $15.00 each. During the month, you sell 120 units at a retail sell price of $25.00 each. Using the FIFO method, the first 120 units sold must be drawn from the oldest stock first. Therefore, we take all 100 units from Batch 1 ($10 * 100 = $1,000) and the remaining 20 units needed from Batch 2 ($15 * 20 = $300). Your total Cost of Goods Sold (COGS) is $1,300 ($1,000 + $300). Your total revenue equals 120 units sold multiplied by $25, yielding $3,000. Finally, your ending inventory consists of the remaining 130 units from Batch 2 valued at $15 each, totaling $1,950.

Always maintain clear, timestamped purchase logs for every inventory batch to ensure your FIFO tracking remains accurate. Be mindful of market volatility, as rising or falling wholesale prices directly impact your taxable income under FIFO. Regularly reconcile your physical stock counts with your digital ledger to prevent overselling errors and negative inventory anomalies.