FIFO vs Weighted Average Inventory Valuation: Worked COGS Comparison

By LedgerMapz Tax & Accounting Engineering Team • Reviewed against official CBIC / FTA / IRS rules • Back to Knowledge Hub

Suppose you purchase Batch 1 (10 units @ $100) and Batch 2 (10 units @ $200), then sell 5 units. Under FIFO, COGS is 5 × $100 = $500 and Closing Inventory is $2,500. Under Weighted Average, the average unit cost is $150, so COGS is $750 and Closing Inventory is $2,250. LedgerMapz Inventory supports both methods natively.