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Advantages and disadvantages of fifo

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 asked

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Discussion about the coating ideas is here so that people can communicate and share their ideas. From now onwards, assignmentgeek review are there to assist all the newcomers who are conscious about things.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

• This method is realistic as it assumed that material is issued to production in the order of their receipt. • Valuation of closing stock tends to be nearer current market price. • No unrealized profit enters into financial results. • The method is easy to operates prices do no fluctuate very frequently.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

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

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