Product Extended FIFO Setup overview

Product > Setup > Extended First-in-First-Out

Function acronym: ICSEF

The master FIFO data for the system is maintained in Product Extended FIFO Setup. Although the records are usually created from receiving functions, such as Purchase Receipt of Inventory Entry, you can create and maintain records in this function.

First In First Out (FIFO) is an inventory valuation method in which the products that are acquired earliest are used or sold first. Because each sale is made out of the oldest products in stock, the ending inventory consists of the most recently acquired products. This method refers to the flow of costs instead of the physical flow of products. The FIFO method of inventory valuation may reflect the most recent costs. It is a realistic value considering the conditions prevailing at the balance sheet date.

Much information is needed when you decide to use the FIFO valuation method. Consult with your accountant or in-house accounting department before making any decisions regarding FIFO.

To use the FIFO method, the Use FIFO option in SA Administrator Options-Products-Costs must be selected. If the Post to G/L By option in SA Administrator Options-Products-Costs is FIFO, the Use FIFO option must be selected. If the FIFO costing method is used, the Roll up Serial/Lot Costs option must be cleared.

These functions calculate the product cost using the addon cost from the Product Extended FIFO Setup record:

  • Sales Entry Processing Invoice Processing Report
  • Product Entry Transactions
  • Transfer Shipping Feedback Entry.

This occurs when FIFO is selected in the Post to G/L By field in SA Administrator Options-Products-Costs, and the Include Addons option is selected.

The Product Maintain Balances Entry addon is averaged again when inventory is relieved.

FIFO layers may be deleted only when these conditions have been met:

  • The Delete Layer When Empty option is selected in SA Administrator Options-Products-Costs
  • The quantity in the layer is 0.
  • One of these conditions is met:
    • The Post to G/L By option in SA Administrator Options-Products-Costs is not FIFO.
    • The layer did not originate with a purchase order.
    • The Post COGS Adjustments in Costing option is not selected in SA Administrator Options-Products-Costs.

These conditions apply for functions except the SA Data Archive Inventory FIFO Layers Report and product deletions. When the Post to G/L by option is FIFO, the purchase orders layers are deleted only in the archive and only when their associated purchase orders are closed.