Final answer:
Process costing FIFO is a method that assigns costs to units of production in a process manufacturing environment based on the assumption that the first units produced are the first to be sold or transferred out of the department.
Step-by-step explanation:
Process costing FIFO is a method used to assign costs to units of production in a process manufacturing environment. It assumes that the first units produced are the first to be sold or transferred out of the department. This means that the units entering a department are assigned the cost of the earliest completed units, while the units leaving the department are assigned the cost of the most recent completed units.
For example, let's say a department starts with 100 units in progress and completes 500 units during a period. The first 100 units completed are debited with the costs of the 100 units in progress at the beginning of the period, while the remaining 400 units completed are debited with the costs of the additional units produced.