Average_cost_method
Average cost method is a method of accounting which assumes that the cost of inventory is based on the average cost of the goods available for sale during the period.[1]
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The average cost is computed by dividing the total cost of goods available for sale by the total units available for sale. This gives a weighted-average unit cost that is applied to the units in the ending inventory.
There are two commonly used average cost methods: Simple weighted-average cost method and perpetual weighted-average cost method.[2]