FIFO Method in ERPinCloud
by bista-admin- Aug 17, 2015
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- Category: Enterprise Resource Planning (ERP), Fifo Accounting Calculator, Fifo Accounting Format, FIFO and LIFO Calculator, Fifo Method Accounting, Fifo vs Lifo Accounting, FIFO vs LIFO Inventory Accounting, Open ERP Features, Open ERP Features Advantages, Open Source Workflow Software, OpenERP Companies, OpenERP Videos
FIFO – First In, First Out:-
FIFO Method is as simple as it sounds. The first lot of stock that comes into your warehouse should be the first that goes out including sending the goods to stores or sending them directly to customers.
So, FIFO is method of moving stock through your warehouse. FIFO is used for inventory management.
Let us see the Flow of FIFO in ERPinCloud
Configuration:-
- Create product and select costing method as FIFO and set cost price.
Go to ->>Warehouse->>Product->>Procurements->>Select Costing Method as FIFO & Set the Cost Price
- Set inventory valuation as real time automated and set stock input account and output account.
Go to ->>Warehouse->>Product->> Set Inventory Valuation as Real Time (automated) & Configure-Stock Input Account & Stock Output Account
How to use costing method FIFO in ERPinCloud:-
Step 1: Create purchase order-1 of 4 quantities for that product and set different unit price other than defined in product and click on receive product
Step 2: Check Journal Entry and the amount which is calculated based on the cost price defined in purchase order-1
Cost price= 80 (Defined in purchase order-1)
80*4=320 (4 =number of quantities)
Step 3: Check product cost price which remains unchanged
Step 4: Create purchase order-2 of 5 quantities for that product and set different unit price and click on receive product
Step 5: Check Journal Entry and the amount which is calculated based on the unit price defined in purchase order-2
Unit price= 110 (Defined in purchase order-2)
110*5=550 (5 =number of quantities)
Step 6: Check product cost price which remains unchanged
Step 7: Create Sale order of 7 quantities of that product which has costing method as FIFO and click on deliver
Step 8: Check Journal Entry and the amount which is calculated based on FIFO
Calculation: Purchase Order-1 is created for 4 quantities at a cost price of 80
Purchase Order -2 is created for 5 quantities at a cost price of 110
As Sales order is for 7 quantities, so 4 quantities is charged at cost price of 80 (4*80=320)
And remaining 3 quantities is charged at cost price of 110 (3*110=330)
As costing method is FIFO 4 quantities is charged as per first purchase order cost price and remaining 3 quantities is charged as per second purchase order cost price
Step 9: Product cost price is changed
As Sales order is for 7 quantities, so 4 quantities is charged at cost price of 80 (4*80=320)
And remaining 3 quantities is charged at cost price of 110 (3*110=330)
As costing method is FIFO 4 quantities is charged as per first purchase order cost price and remaining 3 quantities is charged as per second purchase order cost price
So cost price of product is calculated as (330+320)/7=92.86
You can Try Free Product Trial Today: http://www.erpincloud.com/signup-cloud-erp-free-trial/
