Under a FIFO process costing system, the costs associated with inventory produced this period are kept separate from the costs of inventory produced in other periods.

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In a FIFO (First-In, First-Out) process costing system, the costs of the earliest goods produced are assigned to the first units completed and sold, keeping the costs of inventory produced in different periods separate. This method assumes that the costs of the earliest products made are the first to be allocated to finished goods, allowing for a clear distinction between the costs of inventory produced in the current period versus prior periods.

Under a FIFO Process Costing System, the Costs Associated with Inventory