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FIFO is more profitable
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FIFO : more profit less cost of goods sold
LIFO : less profit expensive cost of goods sold
The Company using FIFO method will earn more profit. When prices increase, this means that ending inventory will be at a higher cost, leaving a lower Cost of Goods which in effect will give the Company a higher profit.
When price is increasing the use of FIFO is more profitable than the use of LIFO before the earliest purchases cost cheaper than the most recent purchases, so selling the cheaper cost product is more profitable than the most recent products purchased at higher prices.
FiFo Method will generate more profit , because its CGS is lower tha Lifo Method in time of inflation or price increase.
The Comapny which is using FIFO will earn more profits when prices are increasing.
The reason is that they will sell first those goods which they purchased first i.e. at low cost and will earn more profits.
