Average Cost Flow Assumption

Sometimes, you just gotta go with the flow. Isn't that what they say at Progressive? Rather than nitpick how much each item costs, companies can use the average cost flow assumption to calculate how much their stuff costs (on average).

To do this, you simply add all the costs of goods sold together, and divide it by the number of goods sold. Since using the average cost flow assumption for calculating cost of goods sold can affect a company’s calculated profitability, be careful how you use it, or else you will make an ASS of U and ME (srsly).