Uma
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narahari
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• 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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lochan
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**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.
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