Hypothetically, consider Walmart purchases product for $1.00 and sells it for $1.20. After several months, the company has 10,000 units in inventory at a cost of $10,000. Its next purchase of 20,000 units came with a cost increase: the cost of product increased to $1.10 per bottle. The company immediately increased its selling price by ten cents per unit and sold 10,000 products for $1.30 per bottle. The company's income statement will report sales of $13,000. The company must now match the cost of the 10,000 products with the $13,000 of sales.