Another big part of my life is education. It’s not all geekery and new technology 
. I am also a business student and ravenous learner. I am a firm believer in always seeking out new opportunities to learn. As I am about to finish up my MBA program at Strayer University, I thought it might be helpful to share some of the tools and knowledge that I have used throughout my program with other students (whether they go to Strayer University or not).
With that said, I am starting a new category called “Perpetual Student.” I will try to keep these posts as generic (non-Strayer specific) as possible. Often these posts will have two categories. One will be called “Perpetual Student” and the other will be whatever the subject matter is. In this inaugural post, the secondary category will be “Managerial Accounting.”
Your accounting professor can usually do a better job of explaining the First In First Out (FIFO) method of evaluating “equivalent unit” (EU) conversion costs than I can. However, if any of this sounds familiar to you, you must be an accounting student or an accountant . When I was working through my FIFO problems in my Managerial Accounting class, I created a FIFO spreadsheet to help me.
Basically, you fill in all the numbers above the production report area and the rest works itself out. I have populated the spreadsheet with data so you can see how it works. I highly recommend studying the formulas in this spreadsheet to get a better grasp on what is actually going on with the FIFO method.
One of the main things to remember with the FIFO method is that “work in process beginning inventory” is ignored when calculating “equivalent units” (EU’s). Only costs during the current period are accounted for. Hence, you will notice in the first “EU” box in the Production Report area that the beginning inventory work in progress percentage is subtracted (from 100%).
Anyway, I hope you find this spreadsheet to be a useful learning tool. Here is the file:
If you have any questions about it, just leave a comment. Happy Calculating!
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[tags] Accounting, Business, Education [/tags]
{ 11 comments… read them below or add one }
Hi! I’m a student from Singapore, doing the managerial accounting now. I’d a very hard time understanding the FIFO concept. You seems to be an expert. I’m stuck at a question, which needs some guidance. Wondering I could send the question to you for help?
Hello Jin,
Did you download the spreadsheet? If you really do need help, please use the contact form to get in touch with me.
Regards,
Harley
I was unable to download the excel file and got a 404 error. Could you check the issue and/or email the file to me if the fix is going to take a while?
Hello Elton,
Thank you for pointing this out. It should be fixed now.
Regards,
Harley Stagner
please help, i do not under stand the accounting of fifo
This spreadsheet was helpful for me to improve the knowledge about FIFO method.
I am really having trouble understanding the FIFO and LIFO. My homework is to use a perpetual inventory system and LIFO/FIFO costing method for a retailer. I have the problems but am so lost as to where to even began.
March 3 Inventory 60 Units For Per unit $1,500 Total $90,000
March 8Purchase 120 Units Per Unit $1,800 Total $216,000
March 11 Sale 80 units per unit $5,000 Total $400,000
March 30 Sale 50 units per unit $5,000 Total $ 250,00
How do I use the FIFO Method with this
I really need some help with FIFO inventory method
Thanks for your assistant
I am confused on what to do?
Date Purchases Cost of Merchandise Sold Inventory
Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost
Mar. 3 60 $1,500 $90,000
8 120 $1,800 $216,000 60 $1,500 $90,000
120 $1,800 $216,000
11 60 $1,500 $90,000 100 $1,800 $180,000
20 $1,800 $36,000
30 50 $2,500
Apr. 8
10
19
28
May 5
16
21
28
31 Balances $894,000 $264,000