A FIFO calculator is a tool used to calculate the cost of goods sold (COGS) using the first-in, first-out (FIFO) inventory costing method. FIFO assumes that the first items purchased are the first items sold and, therefore, the oldest inventory costs are charged against revenue first.
FIFO is one of the two main inventory costing methods, the other being LIFO (last-in, first-out). FIFO is often preferred because it provides a more conservative estimate of COGS and ending inventory, which can result in lower taxes. FIFO can also be helpful in managing inventory levels and preventing spoilage or obsolescence.
