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📦Inventory Costing Methods

Weighted Average Cost

Cost of Goods Available for Sale ÷ Units Available for Sale = Weighted Average Cost per Unit

What It Means

Average all costs together. Falls between FIFO and LIFO.

Example

Total Cost of Goods Available:$50,000
Total Units Available:2,500 units

$50,000 ÷ 2,500

Weighted Average Cost = $20 per unit

Related Formulas

FIFO (First-In, First-Out)

Oldest costs → COGS | Newest costs → Ending Inventory

LIFO (Last-In, First-Out)

Newest costs → COGS | Oldest costs → Ending Inventory

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