When calculating the amount of upcoming investments and purchases, sometimes it is required to calculate the average cost of the goods. However, when the product is heterogeneous, the usual methods of calculating the average cost do not work. Weighted estimates are used in this case.
Instructions
Step 1
First of all, it is necessary to understand why the method of the usual average valuation of the cost of goods is not suitable for use. The price list of any trading company usually has several hundred assortment items. At the same time, it rarely happens that they are all competing substitute goods. Such a range is ineffective and usually leads to a narrowing of demand, and not to its expansion and revenue growth. Therefore, usually each trading company tries to occupy a niche in different product groups. Obviously, it is impossible to calculate the average cost of goods by dividing the total price by the number of items. The number obtained in this way will reflect the "average temperature in the hospital."
Step 2
Therefore, it is more accurate to calculate the arithmetic weighted average. It is done in two stages. To calculate the average cost of a product, divide the entire assortment into groups of similar products that can be compared with each other in terms of price. Within each group, determine the average cost of the goods by dividing the price by quantity as usual. Next, find the share of each group in the total volume of products.
Step 3
After that, to calculate the average cost of goods, multiply the share of each group in the total number of products by the corresponding average prices. The final price obtained in this way will more accurately reflect the average cost of the product. However, even this option may not be suitable if the products are too heterogeneous, such as food and manufactured goods. In this case, it is more correct to calculate the average cost of goods for each type of product.
