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How should these values be determined? A company must choose the most applicable cost flow assumption to its specific inventory. These cost flow assumptions include:
1. First in, first out (FIFO). FIFO is the assumption that the first goods bought
are the first goods that will be purchased by the customer. This means that the goods that are the oldest will be the first to be sold.
FIFO applies to a few types of inventories in a car dealership, like the food and beverages the dealership might offer to potential customers, any vending machines available for employees, and any fluids or parts that might have expiration dates in the mechanic shop...
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