Trace specific units and FIFO layers

Build documented unit cost layers, distinguish actual unit tracing from a cost flow assumption, and compute periodic and perpetual FIFO.

Updated Sep 10, 2026 Review due Nov 8, 2026

Three custom canoes have serial numbers and distinct costs. Two hundred interchangeable paddles do not. Using the same “specific” label for both hides a selection problem.

Build a layer that can survive review

Each layer needs product or pool, date, source, units, unit of measure, qualifying unit cost, extended cost, location or status, and movement. A layer cannot go negative. If it does, stop: a purchase is missing, a sale is dated incorrectly, or units were combined inconsistently.

Specific identification assigns the actual documented cost of the identified unit sold and leaves the costs of the identified units on hand. It fits separately tracked, noninterchangeable items. Selecting among interchangeable units after seeing the desired profit is not supported identification.

FIFO assigns costs, not cartons

FIFO removes the earliest available costs first. In Cedar Trail's stream, 100 units at $10, then 60 at $12, are available before a 120-unit sale. FIFO cost of goods sold for that sale is:

100 × $10 + 20 × $12 = $1,240

The layer after the sale contains 40 units at $12. After 80 units arrive at $14 and 50 more units sell, FIFO removes the remaining 40 at $12 and 10 at $14. Total cost of goods sold is $1,860 and ending inventory is 70 units at $14, or $980.

Periodic and perpetual FIFO reach the same ending layers for this ordered stream. Show both schedules anyway: agreement tests execution, while the dated perpetual path makes the availability constraint visible.

The cost has one place to go

Units: 100 + 60 + 80 − 120 − 50 = 70.

Cost: $1,860 COGS + $980 ending = $2,840 available.

Now mark each conclusion as physical-flow evidence, cost-flow policy, or unsupported inference. “FIFO means Cedar Trail shipped its oldest physical paddle” belongs in the last category unless operations evidence establishes it. If that claim is removed, the $1,860/$980 accounting result does not change; only the unsupported story about the warehouse disappears.

Follow the focused learning path

Start with the Cedar serial-unit and FIFO example. It separates the supported kayak trace from the interchangeable filter pool before it computes FIFO. Then complete the Northstar practice with new identifiers, quantities, dates, and costs. Use the larger Cedar Trail example later to compare FIFO with average and LIFO.