All experiments
Labs
Follow the inventory layers
Same stockroom, different cost, different profit.
Live experiment
Follow the inventory layers
FIFO cost of goods sold1,320
Before you move a sliderWhen input prices rise, which method reports more gross profit?
Cost available = 100 × 10 + 100 × 16 = 2600
Read the mechanism
Under both methods, cost of goods sold plus ending inventory equals the same cost available. When prices are rising, FIFO sends the older, cheaper costs to the income statement first. The cash spent on purchases is identical; only the timing of the expense moves.
Model assumptions and units
Two purchases of 100 units each, no opening stock and no write-downs. FIFO is compared with a periodic weighted average. Both are ways of assigning cost; neither says which physical unit left the shelf.