What is the functional reasoning behind ‘FIFO’ and ‘LIFO’ inventory valuation methods being applicable only with ‘Cost per Part’ inventory part cost level?
Best answer by Heshani Jayawickrama
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FIFO and LIFO
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Because in every other part cost level, the in- and outbound moment is usually irrelevant for costing, because the costs are stored on lot/batch, configuration etc. and have the same cost.
Userlevel 3
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Hello! In first in first out and last in first out, cost is more specific to a particular product (for example, perishable items like food items) rather than the stock movement of that product. For costing purposes, the stock movements of these items are not relevant as costs are picked up and calculated condition, serial, lot batch wise or configuration wise. The unit cost and the inventory value will be stored on the cost level used for the inventory part, that is; if the cost level is cost per lot batch, each lot batch will have a separate unit cost which does not fit in to the picture when it comes to stock movement related inventory valuation methods FIFO and LIFO.
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