in practice, it involves minute calculations for including all these expenses and is a big task compared to the benefit derived from it. Moreover the price changes according to the market conditions and at any given time there will be stock of materials purchased at different times at different prices. Hence the problem as to at what price the materials should be issued? There are many methods of pricing material issues. The most important being: FIFO, LIFO, simple and weighed average methods. 1) First in First Out (FIFO) Under this method material is first issued from the earliest consignment on hand and priced at the cost at which that consignment was placed in the stores. In other words, materials received first are issued first. The units in the opening stock of materials are treated as if they are issued first, the units from the first purchase issued next, and so on until the units left in the closing stock of materials are valued at the latest cost of purchases. This method is most suitable in times of falling prices because the issue price of materials to jobs or work order will be high while the cost of replacement of materials will be low. But in case of rising prices this method is not suitable because the issue price of materials to production will be low while the cost of replacement of materials will be high. The following example will illustrate how issues of materials are valued under this method. Illustration 6: The received side of the Stores Ledger Account shows the following particulars: Jan. 1 Opening Balance: 500 units @ Rs.4 Jan. 5 Received from vendor: 200 units @ Rs.4.25 Jan. 12 Received from vendor: 150 units @ Rs.4.10 Jan.20 Received from vendor: 300 units @ Rs.4.50 Jan.25 Received from vendor: 400 units @ Rs.4 Issues of material were as follows: Jan. 4- 200 units; Jan. 10-400 units; Jan. 15-100 units: Jan 19-100 units; Jan.26- 200 units; Jan.30-250 units. Issues are to be priced on the principle of "first in first out". Write the Stores Ledger Account in respect of the materials for the month of January S42 2) Last in Last Out (LILO) Under this method, issues are priced in the reverse order of purchase i.e., the prices of the latest available consignment is taken. This method is suitable in times of rising prices because material will be issued from the latest consignment at a price which is closely related to the current price levels. Valuing material issues at the price of the latest available consignment will help the management in fixing the competitive selling prices of the products