![]() Instead, the average price of stocked items, regardless of purchase date, is used to value sold items. The average cost method, or weighted-average method, does not take into consideration price inflation or deflation. In other words, divide the total cost of goods purchased in a year by the total number of items purchased in the same year. To determine the average cost of an item, use the following formula:Īvg cost per unit = Total cost of goods purchased or produced in period Number of items purchased or produced in period
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