Compare FIFO, LIFO and weighted-average inventory valuation and cost of goods sold from two cost layers.
Result
How to use this tool
Units on hand at the period start and their unit cost.
Units bought in the period and their unit cost (one blended layer).
Units still on hand at the period end.
Switch FIFO, LIFO and weighted average to see the COGS and inventory effect.
Formula & worked example
Beginning 100 units at $10 plus purchases of 100 at $12, with 80 units left, means 120 sold. FIFO COGS is $1,240 with ending inventory of $960; LIFO COGS is $1,400 with ending inventory of $800; weighted average gives COGS of $1,320.
Limitations — read this before you rely on it
Two cost layers only — real inventory has many layers, plus freight, shrinkage, obsolescence and write-downs. LIFO is not permitted under IFRS and its tax treatment varies by jurisdiction; this is an educational comparison, not accounting advice.
Frequently asked questions
First in, first out: the oldest inventory is assumed sold first, so ending inventory reflects the newest costs.
Last in, first out: the newest inventory is assumed sold first. It is banned under IFRS and restricted in some jurisdictions.
In rising prices, FIFO reports lower COGS and higher profit than LIFO, because older cheaper costs are matched against sales.
It should match the actual flow of goods where possible and follow local accounting standards — the choice also affects tax.
Real systems track every layer. This calculator uses two layers (beginning + one purchase layer) for a clear comparison.