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Weighted Average Costnoun · abbr.

Valuing stock at the blended average cost of all units held.

Weighted average cost recalculates a single blended unit cost every time you receive stock at a new price. Every unit of that SKU is then valued and costed at the same average, no matter when it arrived.

It smooths out price volatility and is far simpler to run than tracking individual layers of cost. The trade-off is that it obscures the actual cost of any specific batch.

How it is calculated

WAC = Total cost of stock on hand ÷ Total units on hand

Recalculated on each receipt, including landed cost components.

Also called

  • average cost
  • moving average cost

Related terms

First In, First Out

FIFO

Issuing or costing the oldest stock first.

Inventory Valuation

Assigning a monetary value to the stock you hold.

Landed Cost

The total cost of a product once it arrives, including freight, duties and fees.

Cost of Goods Sold

COGS

The direct cost of the products a business sold in a period.

More in Inventory

ABC Analysis Asset Tracking Available to Promise (ATP) Backorder Barcode Carrying Cost Consignment Inventory Cycle Count

Weighted Average Cost is not just a definition here

Inventory runs on this vocabulary every day in AWRA OpsHub — 44 of our 257 glossary terms describe things the platform actually does.

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