How to value inventory with weighted average cost
Weighted average cost gives every item held the same cost. Work out a new average after each receipt and price the issues.
Task 1A new average after every receipt4 questions
Weighted average cost, often shortened to AVCO, does not track which items are oldest. Every item in the store is given the same average cost.
- After a receipt, add its cost to the value already held
- Divide that total value by the number of items now held
- Price every issue at that average, until the next receipt
| Date | Movement | Boards | Cost each | Total cost |
|---|---|---|---|---|
| 1 Jun | Opening balance | 20 | 30.00 | 600.00 |
| 5 Jun | Receipt | 30 | 35.00 | 1,050.00 |
Task 2Pricing the issues4 questions