FIFO Batch Costing for Gas Sellers: Why Refills Are Batches

The pain: which cost price is the real one?

Ask any gas seller in Lagos what their cost price is and you will get a pause. Last month the depot sold at ₦1,100 per kg. Two weeks ago it jumped to ₦1,180. The refill you took on Monday came in at ₦1,210. Right now your tank holds a mixture of gas bought at three different prices, and every cylinder you fill draws from that mixture.

So when you sell 12.5kg at ₦1,450, what was your profit? If you use the old price, you flatter yourself. If you use the newest price, you punish yourself for gas you actually bought cheaper. Most sellers give up and just track cash in versus cash out, which tells you nothing about whether your margin is healthy or quietly dying.

This is not a small bookkeeping detail. In a trade where the margin per kg might be ₦200 on a cost of ₦1,200, a costing error of even ₦50 per kg is a quarter of your profit appearing or vanishing on paper.

What FIFO batch costing is, in plain language

Gazeloft solves this with two simple ideas.

First: every refill is a batch. When you buy gas from the depot, you record it as a refill: how many kg and the exact total cost. That refill becomes a batch in the app with its own identity, its own cost per kg, and its own running balance.

Second: sales draw from the oldest open batch first. FIFO stands for first in, first out, which is exactly how gas physically behaves in your business: the gas you bought first is the gas you sell first. When you record a sale, Gazeloft takes the cost of those kg from the oldest batch that still has stock. If a sale straddles two batches, the app splits the cost correctly across both without you doing anything.

Third, and this is the part that keeps your history honest: the cost is frozen at the moment of sale. Once a sale is recorded, its cost of goods sold never changes, no matter what happens to prices afterwards. If the depot price doubles tomorrow, last week's profit stays exactly what it was. Gazeloft never goes back and rewrites your past profit. Your history is a record of what actually happened, not a moving estimate.

Step by step: using batches in the app

1. Record every refill the day it happens. Open your Gas space, choose to record a refill, and enter the kg and the cost. Add the supplier name on the entry so you know which depot the batch came from. If you paid cash, the amount also flows through your cash ledger correctly.
2. Sell normally. You never choose a batch when selling. Enter the kg and price, and Gazeloft assigns the cost from the oldest open batch automatically.
3. Watch a batch drain. In the Refills report (more on this in Article 6), each batch shows how many kg have been sold from it, the revenue those kg brought in, and the net profit so far on that specific refill.
4. Restock before you run dry. When a new refill arrives, record it immediately. Sales continue from the old batch until it is empty, then flow into the new one seamlessly.

Step by step: on the web dashboard

On gazeloft.com the flow is identical. Select your Gas space, record refills from the entry screen with kg, cost and supplier, and view the Refills report from the reports area. The web dashboard is especially pleasant for reviewing batches at the end of the month, because you can see the full list of refills, each with its revenue, net and shortage columns, on one wide screen.

A worked example: two refills, one honest answer

Amina runs a gas shop in Kaduna. Here is one week in her Gazeloft records.

Monday: she has 40kg left from an old refill bought at ₦1,120 per kg. A new 250kg refill arrives at ₦1,200 per kg (total ₦300,000). She records it. Her tank now holds 290kg across two batches.

Tuesday to Thursday: she sells 90kg at ₦1,450 per kg, collecting ₦130,500. Gazeloft costs it like this:

• The first 40kg come from the old batch at ₦1,120 = ₦44,800. That batch is now empty and closed.
• The next 50kg come from the new batch at ₦1,200 = ₦60,000.
• Total cost of goods sold: ₦104,800. Profit so far this week: ₦25,700.

Friday: the depot announces a price jump to ₦1,300 per kg. Here is the key point: nothing in Amina's history changes. Tuesday's profit is frozen at the cost that was true on Tuesday. Her remaining 200kg from the ₦1,200 batch still cost ₦1,200, and when she eventually buys at ₦1,300, that will simply be a new batch with its own cost.

Without Gazeloft, Amina would likely have averaged everything at "about ₦1,200" and never known that her old 40kg batch quietly delivered ₦330 per kg while the new one delivers ₦250. With FIFO batches, she can see the margin shrinking refill by refill, and she raised her selling price to ₦1,500 the same week, before the squeeze ate her profit.

Why frozen costs matter more than you think

Some apps recalculate old profit whenever you edit a price, which sounds helpful but is actually dangerous. Imagine showing your records to a cooperative or a lender, and the profit figure for March changes in July because you edited a price. Nobody can trust a number that moves.

Gazeloft's rule is simple: the cost of a sale is decided once, at the moment you record the sale, from the batch it truly came from. Later price changes create new batches; they never reach backwards. Your March profit in July is the same as your March profit in March. That consistency is what makes the Refills report, the dashboard profit hero and your end-of-year totals actually mean something.

Tips and pitfalls

• Enter the true landed cost. If transport to bring the refill from the depot cost you ₦8,000, you can either fold it into the refill cost or record it as an expense. Pick one method and stay consistent so batches remain comparable.
• Do not merge two deliveries into one entry. If you bought 200kg on Monday and 300kg on Thursday at different prices, record two refills. Merging them destroys the per-batch truth.
• Record refills before the day's sales. The stock guard blocks sales beyond your recorded stock, so an unrecorded refill will stop you at the counter.
• Use backdating if you forgot. If Thursday's refill only gets entered on Saturday, use the date field to pin it to Thursday so FIFO order stays correct.
• Check the Refills report monthly. If net profit per batch is trending down while your selling price stays flat, that is your signal to adjust prices, not a surprise to discover at year end.

See your real margin, refill by refill

Every refill you buy is a small bet on the gas market. Gazeloft tells you, batch by batch, whether each bet paid off. Record your next refill in Gazeloft and let FIFO do the honest accounting for you. Free to start, no card needed. Stop guessing. Start seeing, at gazeloft.com.