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1Pros and Cons of LIFO and FIFOWhy a Company would use FIFO - In inventory management, FIFO means that the oldest inventory items - the ones purchased first - are sold before newer items. Companies must use FIFO for inventory if they are selling perishable goods such as food, which expires after a certain period of time. Companies selling products with relatively short demand cycles, such as designer fashion, also may have to pick FIFO to ensure they are not stuck with outdated styles in inventory.Small companies are more free to choose between FIFO and LIFO, rather than being forced to choose one or the other based on their business models. Because companies do not always pay the same price for each batch of inventory they purchase, they must choose which