Can someone provide a clear comparison table of FIFO, LIFO, and weighted average cost flow assumptions?

Absolutely — cost flow assumptions are a staple CFA Level I topic. Here is a comprehensive comparison using a single dataset so you can see the differences clearly.

Setup — Oakridge Hardware Distributors:

Oakridge sells industrial fasteners. During Q1 2026:

Cost of Goods Available for Sale:

200 × $10 + 300 × $11 + 250 × $12.50 + 150 × $13 = $2,000 + $3,300 + $3,125 + $1,950 = $10,375

Method 1: FIFO (First-In, First-Out)

Sells oldest units first: 200 @ $10 + 300 @ $11 + 100 @ $12.50

COGS = $2,000 + $3,300 + $1,250 = $6,550

Ending inventory = $10,375 − $6,550 = $3,825 (150 @ $12.50 + 150 @ $13)

Method 2: LIFO (Last-In, First-Out)

Sells newest units first: 150 @ $13 + 250 @ $12.50 + 200 @ $11

COGS = $1,950 + $3,125 + $2,200 = $7,275

Ending inventory = $10,375 − $7,275 = $3,100 (200 @ $10 + 100 @ $11)

Method 3: Weighted Average

Weighted avg cost = $10,375 / 900 = $11.528/unit

COGS = 600 × $11.528 = $6,917

Ending inventory = 300 × $11.528 = $3,458

Summary Table — Rising Prices:

Critical Exam Points:

1. All relationships reverse in a declining price environment.
2. LIFO is prohibited under IFRS — only allowed under US GAAP.
3. FIFO ending inventory is closest to current replacement cost.
4. LIFO COGS is closest to current replacement cost.

Practice these comparisons with our CFA Level I question bank.