Calculated Cost Explained: Perpetual Weighted Average

Calculated Cost Explained: Perpetual Weighted Average


Perpetual Weighted Average 

  • Calculated cost of an item is determined using a weighted average that gets re-evaluated when inventory is purchased and sold/depleted
  • Cost is computed for remaining on hand using FIFO 
  • Buy 10 @ $10, then buy 5 @ $3 | Calculated Cost is $100 + $15 = $115 / 15 = $7.67
  • Sell 5 @ $7.67, next sale will equal 5 @ $10, 5 @ $3 | 50 + 15 = $65 / 10 = $6.5

In Perpetual Weighted Average Global, transfers are always computed at default vendor cost because store-to-store transfers are viewed as inventory sold/depleted/purchased because they still exist globally. 








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