FIFO and LIFO Calculator

How to Use the FIFO Method?

FIFO (First-In, First-Out) assumes that the oldest inventory items are sold first. This means that the cost of goods sold is based on the oldest purchase prices, while the ending inventory reflects the most recent purchases.

Formula (FIFO COGS):

COGS = Cost of Oldest Purchases Used

Ending Inventory = Cost of Most Recent Purchases Remaining

To make FIFO calculations even easier, try our Enerpize FIFO template, a ready-to-use tool that shows your COGS and ending inventory step-by-step.

How to Use the LIFO Method?

LIFO (Last-In, First-Out) assumes that the newest inventory items are sold first. This means that the cost of goods sold is based on the most recent purchase prices, while the ending inventory reflects the oldest purchase prices still unsold.

Formula (LIFO COGS):

COGS = Cost of Newest Purchases Used

Ending Inventory = Cost of Oldest Purchases Remaining

To simplify your LIFO calculations, explore our Enerpize LIFO template, which helps you instantly track COGS and ending inventory with clear step-by-step results.

How to Use the FIFO and LIFO Calculator?

Using the FIFO Calculator

1. Enter the quantities and costs of each batch of inventory purchased.
2. Enter the number of units sold.
3. Click Calculate.
4. Instantly get the FIFO COGS, FIFO Ending Inventory, and FIFO Layer-Consumption Breakdown Table.

Using the LIFO Calculator

1. Enter the same inventory purchases.
2. Enter the number of units sold.
3. Click Calculate.
4. Instantly get the LIFO COGS, LIFO Ending Inventory, and LIFO Layer-Consumption Breakdown Table.

Our tool functions as both a FIFO and LIFO calculator.

Examples of Calculating LIFO and FIFO

FIFO Example

Sarah runs a small bakery. She buys flour in two batches:

• 100 kg at $2 per kg = $200
• 100 kg at $3 per kg = $300

She sells 120 kg of flour.

• Under FIFO: The first 100 kg sold are from the $2 batch, and the next 20 kg are from the $3 batch.
• COGS = (100 × $2) + (20 × $3) = $200 + $60 = $260
• Ending Inventory = 80 kg × $3 = $240

The FIFO calculator shows her ending inventory is valued higher because the newer (more expensive) stock remains.

LIFO Example

Now consider the same bakery example.

• Under LIFO: The first 100 kg sold are from the $3 batch, and the next 20 kg are from the $2 batch.
• COGS = (100 × $3) + (20 × $2) = $300 + $40 = $340
• Ending Inventory = 80 kg × $2 = $160

The LIFO calculator shows a lower ending inventory value, but higher COGS, which reduces taxable income.

FIFO vs LIFO

Understanding the difference between FIFO and LIFO is essential for accurate financial reporting and tax planning:

FIFO (First-In, First-Out)

• Matches older, cheaper inventory costs with sales.
• Leads to lower COGS and higher reported profits when prices are rising.
• Results in a higher ending inventory value.

LIFO (Last-In, First-Out)

• Matches newer, more expensive inventory costs with sales.
• Leads to higher COGS and lower reported profits when prices are rising.
• Results in a lower ending inventory value.

Disclaimer

This FIFO and LIFO calculator is provided for general informational purposes only. Inventory valuation methods may vary depending on accounting standards, industry requirements, and tax regulations in your country. Always consult with a qualified accountant before finalizing financial statements.

FAQs

How to do FIFO method with an example?

FIFO (First-In, First-Out):

• The oldest inventory is sold first.
• COGS is based on the oldest purchase prices.
• Ending inventory is based on the most recent purchases.
   

Example (Bakery case):

• Bought 100 kg flour @ $2 = $200
• Bought 100 kg flour @ $3 = $300
• Sold 120 kg

FIFO calculation:

• First 100 kg sold for $2 per attach
• Next 20 kg sold from $3 batch

COGS = (100×2) + (20×3) = 200 + 60 = 260 

Ending Inventory = 80×3 = 240

What is an example of LIFO and FIFO?

A company buys flour in two batches:

• 100 kg @ $2 = $200
• 100 kg @ $3 = $300

Total purchased = 200 kg

The company sells 120 kg.

FIFO (First-In, First-Out)

• Oldest stock (100 kg @ $2) is sold first = $200
• Next 20 kg sold from the $3 batch = $60

COGS FIFO = 200+60=260

Remaining inventory = 80 kg from the $3 batch

Ending Inventory FIFO = 80×3 = 240

LIFO (Last-In, First-Out)

• Newest stock (100 kg @ $3) is sold first = $300
• Next 20 kg sold from the $2 batch = $40

COGSLIFO = 300+40 = 340

Remaining inventory = 80 kg from the $2 batch

Ending Inventory LIFO= 80×2 = 160

How to calculate ending inventory using FIFO?

FIFO (First-In, First-Out): Ending inventory is calculated by valuing the unsold items at the most recent purchase costs, as the oldest costs are assumed to have been sold first.

Example:

Purchases:

100 units @ $10 = $1,000

100 units @ $12 = $1,200

• Total = 200 units
• Sold = 150 units

FIFO:

• First 100 units sold = from $10 batch = $1,000
• Next 50 units sold = from $12 batch = $600
• Remaining = 50 units (all from $12 batch)

Ending Inventory = 50×12 = 600