Sage 300c – Understanding FIFO Costing (FIFO Buckets, Offset Buckets)

3 minute read time.
  • First-In, First-Out (FIFO) costing method.Under this method of cost calculation, Inventory Control assumes that the first units to arrive at a location are the first units shipped. Consequently, the units on hand in the closing inventory are assumed to be from the most recent purchases, and current revenues are matched to oldest costs.
    • To determine if your is setup as a FIFO item, you can see this in the Item Master File. In our Sample Data Item A1-310/0 is a FIFO item.

  • Inventory Control tracks of when inventory arrives based on the Purchase Order Receipt Dates.. Each individual receipt for a particular gets stored in the ICCOST “Bucket”.. Inventory Control will calculate the cost based on the earliest received “Bucket”.  To see what quantities are in each bucket, you can see this is LIFO/FIFO Inquiry.  Click on the Details Button to see each bucket in the given Location.

  • In the above example… If I create a shipment for 11 units, the costs will be calculated out of the first bucket (RCP00000028).. If more than 10 units were shipped, the program would take all the units from the first bucket, and then remaining units from the next bucket (RCP00000044)... so.. the calculated cost would be 343.78 + 36.61 from second bucket.. for a total of 380.39.

  • Run Day End

  • Run Inventory Movement Report to see the Cost of this transaction.

  • Seems simple as that… however where it gets complicated is when Inventory Adjustments are processed… specifically when adjustments are processed to the Offset Bucket.
    • For each item at each location, there is an "offset" bucket used for special cases, such as when you ship more items than there are in stock from a location. (You can ship more items than are in stock only if Inventory Control is set up to allow negative inventory levels.)
    • When processing an Adjustment against a FIFO item you can specify the adjustment against a Specific Bucket or the Offset Bucket.. If you choose Offset bucket, this creates a situation where one can have positive (or negative) quantities and costs in the Offset bucket
    • An offset bucket can contain a positive quantity, instead of a negative quantity, and other buckets may exist while the offset bucket has either a positive or a negative quantity.
    • If you ship more units of an item than the total quantity from all buckets, Inventory Controls records a negative quantity in the offset bucket, and uses the most recent cost for the item at the location to calculate the extended cost.
    • If you ship units when the offset bucket has a positive quantity, the units in the offset bucket are shipped before the units in other buckets.
    • If you ship units when the offset bucket has a negative quantity and there are units in other buckets, the offset bucket is cleared by shipping the number of units you specify plus enough units to cover the negative quantity in the offset bucket. Inventory Control includes in the calculation any cost in the offset bucket (positive or negative), so the offset bucket has zero quantity and zero cost after shipping.
    • Receipts do not affect the offset bucket.


  • I will post an adjustment for 1 unit at a cost of $5000 to the Offset Bucket.


  • Resulting LIFO/FIFO Inquiry will show the status of the FIFO Buckets and the Offset Bucket.

  • If a shipment is created after this, the Offset Bucket is consumed first before the remaining buckets.. so if I ship one or more units, the $5000 cost will be consumed.