What is FIFO? Definition and a simple example

A simple FIFO example

Say you buy 10 units at Rp20,000 per unit, then buy another 10 units at Rp22,000. When 12 units are sold, the FIFO approach uses 10 units from the first batch and 2 units from the second batch to calculate inventory consumption.

Why purchase batches matter

Without batch history, purchase price changes easily get mixed up. Batch records store when goods came in, the quantity, the price per unit, and the remaining unused amount.

FIFO and physical stock

FIFO in your records should ideally match how goods are stored when the nature of the product requires older items to go out first. Physical procedures, however, still need to be adapted to the type of goods and your business operations.

FIFO doesn't replace transaction recording

No method helps if purchases and sales aren't recorded consistently. Transaction data remains the foundation for calculating remaining batches and cost.

FIFO in BukuStok

BukuStok stores purchases as batches and records batch consumption in the sales flow. That way, transaction cost calculations can follow the recorded inventory.

Explore related features

BukuStok's FIFO and stock features sales and profit recording