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โข This method is realistic as it assumed that material is issued to production in the order of
their receipt.
โข Valuation of closing stock tends to be nearer current market price.
โข No unrealized profit enters into financial results.
โข The method is easy to operates prices do no fluctuate very frequently.
**ADVANTAGES AND DISADVANTAGES OF FIFO**
Advantages of FIFO:
โข This method is realistic as it assumed that material is issued to production in the order of
their receipt.
โข Valuation of closing stock tends to be nearer current market price.
โข No unrealized profit enters into financial results.
โข The method is easy to operates prices do no fluctuate very frequently.
Disadvantages:
โข Issue price may not reflect current market price and therefore in times of rising prices,
charge to production is unduly low.
โข Method may involve complex calculations if the prices change frequently.
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