he costing method that we've gone over like for you
though white polo average costs and we're gonna be looking after
facts on the income statement and other accounts within our business like
inventory accounts for action not gonna talk but that's the
identification method just because it's not
at systematic up in inventory cost you not that like
I fight below average cost /url a so it still
is that any better cause the map it but it's more about attack in Baghdad and very
Costin method in which it's usually use for
were really high-price goods were you can just put tags on
and then expect that have been very poor whatever items you sell like in a jury
store or something where there are really
valuable goods being sold and I just want to show you that
this this table in New York on Tyra Banks like for you
we've been over it so many times but it is the same
table I we've been using for all examples I V
unit they've been the same because they've been the same the crazies have
been the same
and I just want to direct your attention to you
fact that our costs or
our crisis for our purchases have been a right thing and so were the graces
for our sales then what this means is that where and and and
lation area deflationary
setting because our prices are rising
it will be looking at how 0 will be looking at inflationary setting in a
deflationary center which basically means
it places when when prices rise which is this situation
anyplace in as well grace's drops so we'll be looking at
what changes with are waco average costs in late on my bed
in those two different studying but first we'll look at the income statement
let's go ahead
and bring that up and look there's so much there
there's so much cover but really I'm just going to point out that we're going
to be looking at
two things mainly here an inventory and cost gets old seat on up there kinda
analyze all this all this stuff right here is actually all the same because
under
buy coverage cost leibowitz actually not going to change
operating expenses are the same as well
doing things that are different are netting congress crop it cost it's old
in an inventory
and a chorus any inventory cost gets old
was changed because those are our inventory
i costi me methods which are paper average cost
and labor leaders of course are going to change depending on which one
reach you so as you can see we have
an inventory rate their 68 50 per paper 68 50 per cost a good soul
for average cost $5 329 an 83-71
for average costs for les photo and inventories
,750 and cost gets old is nine thousand nine hundred fifty and you'll notice
bad ending inventory in and cost of goods sold
have endeavors relationship
so what I mean by this as that's when
cost run an inventory
actually goes down our cost of goods sold
will go up in this always happened so let's
but look at this ballsy play pro I
are any event or a 68-58 hospital 6850
an average costs are an inhibitory goes down rates so that
should mean our cost guides sold does go up in a course that doesn't
it doesn't 271 and girl a poet dropped even further and cost good so it goes up
you been further in this should make sense because
be beyond you were an inventory we have
be it be are less cost of goods sold we have
or be the last any dip into rehab
be more cost good soul will have so
I just want to show you that under the paper map it I'll real
course have be most amount of net income and that's because
our cost of goods sold expands is
the smallest so as you can see he gets larger
and larger no actually what it is
no aspect smaller and chill I was never been intense there
on the but yet the average cost method will always
be the net income bigger will always be in the middle between
by go in life because the course to make something at the average
so it should not be
the worst or the best for a net income so I'm actually going to you
on minimize this a bit so we're gonna be looking at that
that that example of what I was talking about ok we can't see all of this still
that's not all it's probably just enlarge it in HD
um but for some actually going to bring up the table again
and show you course like it said we r this
this example was an inflation example
and i'm in a mood this over over here okay
that this all in a minute trying that this all in
so yeah this this example was an inflationary example because
what happened is that arc races were
were right you know you can see they were rising rising rising
so white pearl if you remember
if you remember if I actually area bats bring up the income statement
are ending inventory
was actually was actually
the the highest
so rising prices equals an inflationary
environment so reading inventory
will be the highest our average will be the average of course
an are late though I method will have to be
the lowest ending inventory and our cost of goods sold
for five bux it will be the lowest
while a pro will be the highest told us mark this means that
in the middle and of course net income will be
the highest while Wipro
will be the lowest and this should make sense
because if you look at the table are our cost of goods sold
will be the lowest for wait because we're expecting all the
all be the cheaper purchases first while Wipro
word be expecting all be more expensive
urge says her so that's why expenses are higher
/url a pro an hour right in crates
situation now it the prices were follow
boleyn I should say it would be be exact
of said so what would happen
is and I D legionary
situation wat Bo would be
the lowest well actually used will
you could Anna confusing with them using blue
would be the lowest average average of course
and labor would-be the hyatt's
while cost of goods sold would be the
the highest Berklee go
and the lowest for late so and net income
would be the lowest for by a pro
and the highest for labor so
exactly just the opposite other right in Christ
scenario or inflationary up scenario
so hopefully you kind of understand that on
if I did do it i'd deflationary example it would have what like this but I
decided
CU's the you brightened craze
example for all for my articles so hopefully understand this
and yeah we're going to be covering it the last article on the next one which is
going to be moving average
for the perpetual system using a weighted average cost method so
Oakley that all made sense and I'll see you guys next tutorial
Thanks for visit..
No comments:
Post a Comment