If the FIFO cost method is used in a process costing system, costs in the beginning inventory are kept separate from current period costs.

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Quizplus · Accepted Answer

FIFO (First-In, First-Out) method of cost accounting assumes that the first units purchased or produced are the first ones to be sold or used in production, and therefore the cost of the beginning inventory is kept separate from current period costs. This is because the cost of the beginning inventory may be different from the cost of the current purchases or production, and separating them allows for more accurate cost tracking and valuation.

If the FIFO Cost Method Is Used in a Process