In FIFO costing method, if when we transfer one item with different cost (more than 1 quantity is transferred having different cost) from Location A to Location B, this transfer happens fine. Each item is brought in Location B with their respective cost. While transferring back same item (even quantity 1) from Location B to location A, this transaction takes average cost of the item and brings at Location A. But actually, as per FIFO process, it should take the respective cost it came to Location B.
Hence it is requested for FIFO costing method, all the transfers should happen based on the FIFO costing and not average cost.

by: Anwar S. | over a year ago | Operations Management