The LIFO Method In Cost Accounting.
As against the First in First Out method the issues under this method are priced in the reverse order of purchases i.e., the price of the latest available consignment is taken. LIFO method is sometimes known as the replacement cost method because materials are issued at the current cost to jobs or work orders except when purchases were made long ago. This method is suitable in times of rising prices because material will be issued from the latest consignment at a price which is closely related to the current price level. Valuing material issues at the price of the latest available consignment will help the management in fixing the competitive selling prices of the products. LIFO method was first introduced in the U.S.A. during the Second World War to get the advantages of rising prices.
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