The first-in, first-out process-costing method computes unit costs by confining equivalent units to work only done during the current period.

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The first-in, first-out (FIFO) process-costing method assumes that units completed and transferred out are composed of the oldest inventory in the process, while equivalent units are calculated based on the amount of work done during the current period only. This method is based on the assumption that the oldest units in the process are completed and transferred out first, therefore confining equivalent units only to work done during the current period.

The First-In, First-Out Process-Costing Method Computes Unit Costs by Confining