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Reference.org
Average cost method
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<p>Average cost method is a method of <a href="/facts/Accounting/sHznDY3V">accounting</a> which assumes that the cost of inventory is based on the average cost of the goods available for sale during the period. </p><p>The average cost is computed by dividing the total cost of goods available for sale by the total units available for sale. This gives a weighted-average unit cost that is applied to the units in the ending inventory. </p><p>There are two commonly used average cost methods: Simple <a href="/facts/Weighted-average_cost/NpKDlmGJ">weighted-average cost</a> method and perpetual weighted-average cost method. </p>