LIFO

Last In, First Out is an inventory costing method where the most recently acquired items are assumed to be sold or used first. LIFO affects inventory valuation and cost of goods sold calculations in contractor accounting systems.

LIFO usage in government contracting must be consistent with contractor cost accounting practices and disclosed to the government. Understanding LIFO implications helps contractors manage inventory costs and comply with CAS requirements. LIFO may not be appropriate for all government contract cost accounting situations.