The first-in, first-out process-costing method assumes that the earliest equivalent units in work in process are completed first.

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The first-in, first-out (FIFO) process-costing method assumes that the first units added to work in process are the first ones completed. This is based on the assumption that the costs of the earliest units are less subject to change or variability than the costs of the later units. Therefore, the FIFO method assigns costs to units in the order they are added to production, resulting in the assumption that the earliest equivalent units in work in process are completed first.

The First-In, First-Out Process-Costing Method Assumes That the Earliest Equivalent