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Using FIFO, you calculate the cost of goods sold expense as follows: In short, you use the first three units to calculate cost of goods sold expense. The cost of the ending inventory asset, then, is $106, which is the cost of the most recent acquisition.The $412 total cost of the four units is divided between $306 cost of goods sold expense for the three units sold and the $106 cost of the one unit in ending inventory.The total cost has been accounted for; nothing has fallen between the cracks.he $412 total cost of the four units is divided between $306 cost of goods sold expense for the three units sold and the $106 cost of the one unit in ending inventory. The total cost has been accounted for; nothing has fallen between the cracks.
FIFO periodic (and perpetual) means that you first match the first or oldest costs with the current period's sales. For the 120 units sold in 2014 the cost of goods sold under the FIFO cost flow will be 20 units at $10 PLUS 40 units at $11 PLUS 40 units at $12 PLUS 20 units at $13 = $200 + $440 + $480 + $260 = $1,380.[The cost of goods remaining in Inventory will be 30 units at $13 = $390. company purchased items for inventory during 2014 at continuously higher costs. Its last two purchases of 2014 were 20 units on December 20 at a cost of $14 per unit and 30 units on December 30 at a cost of $15 per unit.