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Female Narrator: Okay, so here's the funnest one.
Now, we get to do the average one for perpetual.
So remember, we are going to do average...perpetual.
Now, perpetual inventory,
we have to keep track every single step of the way,
so that means we're going to have
to recalculate our average.
So the first thing we did
is we went out and bought some inventory...
or Lions and Tigers went out and bought some inventory.
They bought 10 units at 5 for a total of $50.
Well, what's their average cost?
Well, it's $5, 'cause they only have one layer.
Every time you purchase inventory
under perpetual average,
you will have to recalculate the average cost.
On the 5th, we had a sale, so we don't need to do anything.
It's going to look just like the other problems,
'cause here's my average cost.
So I sold 'em for $40.
I have 2 left at 5 for a total of 10.
On the 10th, I purchased 12 leashes
at $6 each for a total of $72.
Here's where the average comes into play.
I'm gonna take these 2 units that I had,
plus the 12 that I purchased,
and I'm gonna show that I have 14 units.
Okay?
It's gonna be my 14 units.
Then, I'm going to take the $10, plus the 72--or my total cost--
and I'm gonna put that answer right there.
So I have $82-- $82 divided by 14 leashes
gives me an average cost of $5.857.
I recommend you go out three places.
Um...make sure that you're paying attention
to what the homework problems are telling you to do,
so you're consistent with that.
So then, I have 14 at 5.857.
Okay?
So now...when I sell some units on the 15th,
I sell those 6 leashes at 5.857--or a total of 35.14.
Now, I have 8 leashes left at 5.857--or a total of $46.856.
That's what I have left.
Now, I get to do that again.
On the 22nd, I purchase another 15 leashes.
This time, I purchase 'em at 7,
so I have a total purchase price of 105.
I need to figure out how many leashes I have.
I need to figure out their total cost,
so then, I can compute the average cost.
So 8 plus 15 is 23 leashes;
$46 and 85.6 cents, plus 105, is 151.856;
so 151.856 divided by 23 equals...what?
6.602.
These are the numbers that I gave you
on the Lions and Tigers problem for the average, isn't it?
And you could see why Jason thought
that this was too much work,
because you have to recalculate it every single step of the way.
If we were using perpetual moving average,
I'm hoping we would have
a computer system to help us out.
Now, we're gonna sell another 9 units for 6.602--or 59.418.
We're using that average cost.
We have 14 units at 6.602--
or $92.43 left in our ending inventory.
And we have a cost of 134.56 for the month.
Okay?
Alright, I look forward to seeing your questions
in the discussion board
and be watching for the next video.