The last-in, first-out (LIFO) cost flow assumption allocates the cost of supplies available for use between ending supplies (or supplies at hand) and cost of goods sold based on the assumption that the most recent supplies used (the last in) are the first supplies used (the first out). Therefore, the Last-in, First-out (LIFO) cost flow assumption results in the most recent costs incurred from using supplies being allocated (transferred) to the production process and therefore the earliest (and oldest) cost of supplies used, while the costs incurred from purchasing supplies are allocated to cost of goods sold.

I am trying to use supplies/baking supplies in place of inventory as you can see. Do the above sentences make any sense and/or is accurate in my attempt to use supplies/baking supplies in relation to Last-In, First-Out (FIFO) inventory costing method for pricing ending supplies, or supplies at hand, and cost of goods sold?

Last-In, First-Out (LIFO) The last-in, first-out (LIFO) cost flow assumption allocates the cost of goods available for sale between ending inventory and cost of goods sold based on the assumption that the most recent purchases (the last in) are the first ones sold (the first out). Therefore, the LIFO cost flow assumption results in the most recent costs incurred being allocated to cost of goods sold, while the earliest (and oldest) costs are allocated to ending inventory. These relationships are shown in Exhibit 7.6