First-in,first-out (FIFO)process costing transfers out the costs in beginning inventory before transferring out the costs associated with units started and completed.

Question

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FIFO assumes that the first units that enter the production process are the first ones to be completed and transferred out. Therefore, the costs associated with those units (i.e., beginning inventory) are transferred out first, followed by the costs of units started and completed during the period. This is why it is called "first-in,first-out".

First-In,first-Out (FIFO)process Costing Transfers Out the Costs in Beginning Inventory