calculate the average purchase
Calculating the average purchase price of goods when they differ is one of the problems facing store accounts. How can we calculate profit in the Al Badr program for daily sales, where there are old goods at a price and others at a different price?
New today is a special setup for Al-Badr accounting software that allows you to calculate the purchase price of your products in multiple ways. This feature addresses a common daily challenge faced by all stores that can significantly confuse store accounting. This challenge arises when you have a particular product that you purchased at a specific price and set a selling price for it. Subsequently, you acquire more of the same product, but the purchase price has changed, either increasing or decreasing. As a result, you have some of this product in your store at the old purchase price and some at the new purchase price. This discrepancy can lead to inaccuracies in profit calculations. The question is, will the software calculate the profit based on the old purchase price or the new one?
How to calculate the average purchase price of goods when it varies with the Al Badr program for daily sales
To clarify, let’s take an example of a specific item called “Product 1”. You bought a quantity of 6 pieces at a purchase price of 13 pounds. The selling price was set at 17 pounds. Then, you sold 2 pieces of this product for a total selling price of 34 pounds, with a purchase price of 26 pounds. You were left with 4 pieces at a selling price of 17 pounds and a purchase price of 13 pounds. Then, you made a new supply of the same product, buying 9 pieces at a different purchase price of 14 pounds instead of 13 pounds. They were sold at the same initial selling price of 17 pounds. In summary, only the purchase price of the first and second quantities changed calculate the average purchase.
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Here, you are creating a new sale for this product with a quantity of 7 pieces. The problem here is that you have old stock of 4 pieces in the store at an old purchase price of 13 pounds, and new stock of 9 pieces at a new purchase price of 14 pounds. So, will the program calculate based on the old price of 13 pounds, making the profit per piece 4 pounds, or the new price of 14 pounds, making the profit only 3 pounds?
But don’t worry, dear customer of Al-Baraka for Smart Systems and Software. We have provided you with a new feature in the Badr program for daily sales, inventory management, and stores to solve this dilemma so that you don’t face any difficulties in obtaining accurate and clear new reports without any confusion in the calculations calculate the average purchase.
All you have to do is go to (Main _ Settings _ Program Settings _ Add Purchases section) and you will find three options that you can choose from calculate the average purchase:
- calculate the average purchase
- Latest purchase price per item.
- Average purchase price per item.
- Actual cost.
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What will happen if I select “Last Purchase Price per Item”?
Here, we have a new sale for a quantity of “7 pieces” of this item, which will be deducted from a total quantity of “13 pieces” of the item consisting of “4 old pieces + 9 new pieces”. Here, the program will calculate the last purchase price at which you purchased the item, which is an amount of “14 Egyptian Pounds”, so that the profit of all the old and new pieces is “3 Egyptian Pounds”, as it will calculate the purchase of the four old pieces at “14” Egyptian Pounds instead of “13” Egyptian Pounds, and here the program will subtract the total number of “7” pieces at a selling price (7 * 17 the new price = 119 Egyptian Pounds) from the purchase price of the product at the last price “14” Egyptian Pounds (7 * 14 = 98) so that this process (119 – 98 = 21 Egyptian Pounds) is the profit from this sale calculate the average purchase.
What happens if I choose (average purchase price of the item)?
Here, the program will perform the calculation in a different way. It will calculate the average purchase price of the item by calculating the purchase price of the old goods (4 pieces at 13 pounds, which is 4 * 13 = 52 pounds) and then calculating the purchase price of the new goods (3 pieces at 14 pounds, which is 3 * 14 = 42 pounds). This gives us a total cost of goods of (52 + 42 = 94 pounds). Then, it divides the total cost of the goods (94 pounds) by the total number of pieces (old and new, which is 7 pieces) to get the average purchase price (94 / 7 = 13.42 pounds). After that, it multiplies the average price by the number of pieces (13.42 * 7 = 94 pounds). Finally, it subtracts the purchase price of the pieces (94 pounds) from the total selling price (119 pounds) (119 – 94 = 25 pounds), which is the total profit for this sale calculate the average purchase.
What happens if I choose (actual cost)?
Here, the program will calculate the profit for each item based on its original purchase price, then it will sum up the results to get the final profit. For example, the program will sell the old quantity first, and if there are more items required to be sold, the program will switch to the item with the new price and sell from it. For instance, it will calculate the first required quantity of “7” pieces from the remaining old quantity of “4” pieces at a purchase price of “13” pounds, for a total price of (4 * 13 = 52). Then it will calculate the rest of the sale from the goods with the new purchase price of “14” pounds, which is a number of “3” pieces, for a total price of (3 * 14 = 42).
Here, the two totals are added together (52 + 42 = 94) and subtracted from the total selling price (7 * 17 = 119) to get this calculation (119 – 94 = 25 pounds), which is the total profit in this way. You will notice, dear customer, that calculating the profit at the actual cost gives the same result as calculating it at the average price, while both differ from calculating the profit at the last purchase price of the item.
calculate the average purchase
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To make it easier for you to notice the details of the process, note the following tables that cover process by process in detail calculate the average purchase:
Buying the product for the first time at its first purchase price and its selling price as well
Then we will make a new sale for 2 pieces of the same product
calculate the average purchase
Then we process a new supply of 9 pieces of the same product, but at a different purchase price and the same selling price
Now we want to make a new sale for 7 pieces of the same product, but we will find that there is an old quantity at an old price and a new quantity at a new price. Here the program will calculate the profit in one of three ways:
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First: Calculate using the method (last purchase price of the item):-
Here the program will consider all product purchase prices as the last purchase price at which the product was purchased and subtract it from the selling price multiplied by the number of products being sold to obtain the profit as follows
calculate the average purchase :
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Second: Calculate using the average purchase price of the item:
Here the program will calculate the old product sold at its old purchase price, as well as calculate the new product sold at its new purchase price, then add the two prices and divide them by the number of all sold quantities, new and old, to get an average profit based on the average purchase price. Then the quantity is multiplied by the average, and this choice will save you in In the case of a difference in the purchase price only, or worse than that, when the purchase and sale prices also differ, as follows calculate the average purchase calculate the average purchase :-
Thirdly: Calculating the average profit using the actual cost for the purchase price:
Here, the program calculates the profit for each product based on its actual purchase price subtracted from its selling price. Then, it sums up the results for both old and new products. It’s worth noting that the program sells the old quantity first, and when it runs out while demand continues, it starts selling the new quantity. This ensures that you get your profit according to the actual cost of the product as follows:
calculate the average purchase
