UK Buying Cost

[mike clemett]

Hi, I'm trying to calculate my buying cost per item
The package has different valued items, for example the total cost is 45k
The total items that I'm buying add up to 12,300
But have different RRP selling prices from £5 to £50
So how do I calculate what the cost of each item is
Thanks
Mike

 

[CPAinUSA]

Hi Mike,
I think it all depends on what you are trying to do, what outcome you are looking for.
From your description, it sounds like these are 12,300 individual items that cost you a total of £45,000. So their average cost is about £3.65 each?
If the difference is not that material, just cost each purchased unit at £3.65 and be done with it.
Or, if individual margins are something you want to measure, just use a weighted average based on the total selling price. If the total selling price of this "package" of purchased goods is, say, £300,000, then an item that sells for £50 has a "cost" of 50/300,000 X 45,000 = £7.50. Its "share" of the costs based on selling price.
I don't know your cost regs in the UK. But here in the US our cost system can usually be based on any reasonable assumption, as long as we keep it consistent.