Calculate weighted average inventory cost instantly. Enter purchase batches, compare WAC vs FIFO vs LIFO methods, determine accurate cost per unit, and compare against your stock average or weighted percentages for overall financial analysis.
A weighted average cost calculator computes the average cost per unit of inventory by dividing the total cost of goods available for sale by the total number of units available. Each purchase batch is weighted by its quantity, so larger orders have more influence on the average cost per unit than smaller ones.
Businesses purchase inventory at different prices over time. Using a simple average of purchase prices ignores volume differences. The weighted average cost method accounts for the fact that buying 1,000 units at $5 has far more impact on your true average cost than buying 10 units at $20.
Retailers, manufacturers, wholesalers, ecommerce businesses, accountants, and procurement managers use weighted average cost calculations for inventory valuation, COGS determination, pricing decisions, and financial reporting under both GAAP and IFRS standards.
While you can calculate WAC manually, a calculator eliminates arithmetic errors, handles unlimited purchase batches instantly, and provides visual breakdowns that help you understand how each batch influences your average cost per unit.
Type each purchase batch's unit cost into the “Unit Cost” column. This is the price per unit for each inventory purchase — supplier quotes, purchase orders, or manufacturing costs.
Enter the number of units purchased in each batch. In inventory costing, quantity is the weight — larger orders pull the average cost toward their unit price.
Click “Add Batch” to add more purchase entries. Include beginning inventory and every subsequent purchase to get an accurate weighted average cost.
Results compute instantly as you type — no button needed. The calculator multiplies each cost by its quantity, sums the products, and divides by total units.
Review the weighted average cost per unit, total inventory value, cost distribution chart, and step-by-step breakdown. Use Copy or Download to save your results.
The formula multiplies each purchase batch's unit cost by the number of units in that batch, producing a “total cost” for each batch. Then it sums all batch total costs (numerator) and divides by the total number of units across all batches (denominator). The result is the true cost per unit that accurately reflects purchase volumes.
Batch A: $12 × 500 = $6,000 | Batch B: $9 × 800 = $7,200 | Batch C: $15 × 200 = $3,000
WAC = ($6,000 + $7,200 + $3,000) ÷ (500 + 800 + 200) = $16,200 ÷ 1,500 = $10.80/unit
Multiply each unit cost by its quantity
Each batch produces a total cost
Add all batch total costs together
Divide total cost by total quantity
$10.80 per unit
The largest batch at $7.25 dominates, pulling WAC below the simple average of $8.25.
Q3's large volume at $21.00 offsets Q2's higher price. Simple average: $22.83.
Rush order at $18 barely affects WAC because it's only 100 units of 1,100 total.
Bulk discount at 2,000 units dominates the WAC, reducing it well below the $5.10 simple average.
Existing stock on hand
Additional inventory bought
Sum of all batch costs
Total Cost ÷ Total Units
Units sold × WAC
Remaining units × WAC
Enter each purchase batch into our calculator above. The tool automatically performs all multiplications, summations, and division. Results update in real time as you type, with visual distribution charts and step-by-step breakdowns.
In Excel or Google Sheets, use =SUMPRODUCT(B2:B10,C2:C10)/SUM(C2:C10) where column B contains unit costs and column C contains quantities. This single formula handles all the math for any number of purchase batches.
This produces a single blended cost per unit that reflects all purchase prices weighted by their respective quantities. It is the fundamental metric used in the weighted average cost method for inventory valuation.
A retailer has three purchase batches:
WAC per Unit = $4,775 ÷ 500 = $9.55. Every unit in inventory — regardless of when it was purchased — is valued at $9.55.
The weighted average cost method (also called AVCO or Average Cost method) is an inventory valuation method that assigns the same average cost to every unit of inventory available for sale during the period. It blends the costs of all units together.
When goods are sold, the cost assigned to COGS equals the weighted average cost multiplied by the number of units sold. The remaining inventory is valued at the same weighted average cost per unit, producing consistent valuation across all units.
Ending inventory is valued at WAC × units remaining. This method produces a middle-ground valuation between FIFO and LIFO during price changes, smoothing out cost fluctuations for more stable financial reporting.
Unlike FIFO (oldest first) or LIFO (newest first), the weighted average cost method makes no assumption about which units are sold first. All units are treated identically at the same blended cost, regardless of when they were purchased.
Under the periodic system, the weighted average cost is calculated once at the end of the accounting period:
All units sold during the period are assigned this single average cost. The WAC is not recalculated after each purchase — only at period end.
Under the perpetual system (also called moving average), the WAC is recalculated after every new purchase:
Each sale uses the most current WAC at the time of sale. The cost per unit changes with every purchase, providing a rolling average cost.
| Feature | Weighted Average Cost | Moving Average Cost |
|---|---|---|
| Calculation Timing | End of period (periodic) | After every purchase (perpetual) |
| Recalculation | Once per period | After each purchase |
| COGS Accuracy | Period-level average | Transaction-level average |
| System Requirement | Manual or periodic system | Perpetual inventory system |
| Complexity | Simpler | More complex |
| Best For | Small businesses, periodic reporting | Large businesses, real-time tracking |
| Feature | WAC (Average) | FIFO (First In, First Out) | LIFO (Last In, First Out) |
|---|---|---|---|
| Cost Flow | Blended average | Oldest costs first | Newest costs first |
| COGS (Rising Prices) | Middle | Lowest | Highest |
| Ending Inventory (Rising Prices) | Middle | Highest | Lowest |
| Profit (Rising Prices) | Middle | Highest | Lowest |
| Tax Impact | Moderate | Higher taxes | Lower taxes |
| GAAP Allowed | Yes | Yes | Yes |
| IFRS Allowed | Yes | Yes | No |
| Best For | Interchangeable goods | Perishables, tech | Tax optimization (US) |
See how FIFO, Weighted Average, and LIFO produce different results from the same purchase data. Adjust the units sold to see changes in COGS, ending inventory, and profit.
No need to track individual batch costs or determine which specific units were sold. All units carry the same blended cost, simplifying record-keeping and inventory management significantly.
When purchase prices vary, WAC produces a middle-ground cost that smooths volatility. This prevents dramatic swings in COGS and profit margins that can occur with FIFO or LIFO during price changes.
WAC is accepted under both GAAP and IFRS, making it suitable for international companies. The straightforward calculation also makes auditing and financial reviews simpler.
Ideal for businesses with large quantities of identical or similar items — commodities, bulk goods, consumables — where tracking individual unit costs is impractical.
By blending all costs together, WAC can obscure rising or falling purchase prices. Managers may not notice significant cost increases until the weighted average has already risen noticeably.
In periods of rising prices, LIFO produces higher COGS and lower taxable income. WAC falls between FIFO and LIFO, offering less tax benefit than LIFO (in jurisdictions where LIFO is permitted).
Businesses that need to track specific production batches (pharmaceuticals, perishables with expiry dates) cannot use WAC because it treats all units identically regardless of batch.
Under the perpetual system, WAC must be recalculated after every purchase. With frequent purchases, this creates computational overhead compared to FIFO's straightforward queue approach.
Under US Generally Accepted Accounting Principles, the weighted average cost method is fully permitted for inventory valuation. It is one of three accepted methods alongside FIFO and LIFO, applicable to both periodic and perpetual inventory systems.
International Financial Reporting Standards (IAS 2) allow the weighted average cost method. Notably, IFRS prohibits LIFO, making WAC and FIFO the only standard-compliant options for international companies.
COGS under WAC = Units Sold × Weighted Average Cost per Unit. Because all units share the same cost, calculating COGS is straightforward — just multiply the number of units sold by the current WAC.
Ending Inventory = Units Remaining × Weighted Average Cost per Unit. The balance sheet reflects inventory at the blended cost, providing a moderate valuation between FIFO and LIFO extremes.
Column A: Description, Column B: Unit Cost, Column C: Quantity
=SUMPRODUCT(B2:B10,C2:C10)/SUM(C2:C10)This single formula handles any number of purchase batches and produces the weighted average cost per unit.
SUMPRODUCT multiplies each unit cost by its quantity and sums the results — exactly the numerator of our WAC formula. Dividing by SUM of quantities gives the weighted average.
SUMPRODUCT(15,200) = 16,200SUM(200) = 1,50016,200 / 1,500 = $10.80For a rolling average in perpetual systems, add a helper column D with running WAC:
D2 = (D1*C_prev + B2*C2) / (C_prev + C2)Where C_prev is the previous cumulative quantity. This recalculates WAC after each new purchase entry.
Track the true cost of inventory across multiple purchase batches. WAC simplifies inventory valuation for balance sheet reporting.
Retailers buying identical products at varying wholesale prices use WAC to set consistent sell prices and maintain profit margins.
Calculate blended raw material costs across supplier orders. Essential for accurate product costing and manufacturing overhead allocation.
Wholesalers purchasing from multiple suppliers at different prices use WAC to determine their true landed cost per unit.
Online sellers with fluctuating supplier costs use WAC to price products competitively while maintaining consistent margins across inventory.
Procurement teams compare blended costs across suppliers and time periods to evaluate purchasing strategies and negotiate better terms.
Averaging $12, $9, and $15 gives $12.00 — but the true WAC is $10.80 because 800 units at $9 outweigh 200 at $15. Always weight by quantity.
Dividing total cost by the number of purchase batches (3) instead of total units (1,500) produces $5,400 — completely wrong. Divide by total units.
Excluding existing on-hand inventory from the calculation ignores units already in stock, producing an inaccurate weighted average that only reflects new purchases.
Entering some costs in dollars and others in euros, or mixing per-unit and per-case prices, produces meaningless results. Standardize all inputs first.
Include all inventory (beginning + purchases). Multiply each unit cost by quantity. Sum all products. Sum all quantities. Divide. Our calculator does this automatically.
Focuses on the purchase side — how much you paid for inventory. Used for inventory valuation, COGS calculation, and financial reporting. The “cost” includes purchase price, freight, duties, and other acquisition costs.
Can refer to either purchase or selling prices, weighted by volume. In finance, “volume-weighted average price” (VWAP) is a trading benchmark. The key difference is context: cost is what you pay; price is what you charge or what the market trades at.
Weighted Average Cost (WAC) is an inventory valuation method that calculates the average cost per unit of physical goods. It deals with product inventory.
Weighted Average Cost of Capital (WACC) is a corporate finance metric that calculates the blended cost of a company's financing sources — debt and equity — weighted by their proportions in the capital structure. It deals with financial capital, not physical inventory.
While both use the weighted average concept, they apply to fundamentally different domains. For WACC calculations, see our dedicated WACC calculator.
A weighted average cost calculator is a tool that computes the average cost per unit of inventory by weighting each purchase batch's unit cost by its quantity. It divides the total cost of all goods available by the total number of units, producing a single blended cost that reflects purchase volumes.
Multiply each purchase batch's unit cost by its quantity to get each batch's total cost. Sum all batch total costs. Sum all quantities. Divide the total cost by total quantity. The result is the weighted average cost per unit.
WAC per Unit = Σ(Unit Cost × Quantity) ÷ Σ(Quantity). For example, (500×$12 + 800×$9 + 200×$15) ÷ (500+800+200) = $16,200 ÷ 1,500 = $10.80 per unit.
Divide the total cost of goods available for sale by the total number of units available: Total Cost ÷ Total Units = WAC per unit. Each unit in inventory — regardless of when purchased — carries this same cost.
The weighted average cost method (AVCO) is an inventory valuation approach that assigns the same average cost to every unit. It blends all purchase prices by volume, and uses this blended cost for both COGS and ending inventory valuation.
A simple average treats all purchase prices equally regardless of quantity. Weighted average cost multiplies each price by its quantity, giving more influence to larger purchases. If you buy 1,000 units at $5 and 10 units at $50, simple average = $27.50 but WAC = $5.45.
Use WAC when inventory items are interchangeable (commodities, bulk goods), when individual batch tracking is impractical, when you want to smooth price fluctuations, or when operating internationally (IFRS prohibits LIFO, making WAC or FIFO the options).
WAC is typically calculated once at period end (periodic system). Moving average cost recalculates after every new purchase (perpetual system). Both use the same formula, but moving average provides a more current cost that changes with each purchase event.
FIFO (First In, First Out) assumes the oldest inventory is sold first, so COGS reflects older prices. WAC blends all prices together. In rising-price environments, FIFO produces lower COGS and higher profit than WAC. WAC produces middle-ground results.
LIFO (Last In, First Out) assumes newest inventory is sold first, producing higher COGS and lower profit in rising markets. WAC blends all costs. LIFO is prohibited under IFRS but allowed under US GAAP; WAC is accepted under both standards.
Use =SUMPRODUCT(CostRange, QuantityRange)/SUM(QuantityRange). For example: =SUMPRODUCT(B2:B10,C2:C10)/SUM(C2:C10) where B contains unit costs and C contains quantities. This works in both Excel and Google Sheets.
Yes. WAC is fully accepted under both US GAAP and IFRS (IAS 2). It is one of the most universally accepted inventory valuation methods globally. Notably, IFRS prohibits LIFO, making WAC and FIFO the only compliant options internationally.
WAC assigns the same blended cost to both COGS and ending inventory. In rising price environments, WAC COGS falls between FIFO (lower) and LIFO (higher), producing moderate profit. Ending inventory is valued at the same WAC per unit.
Advantages: simplifies record-keeping, smooths price fluctuations, accepted globally (GAAP + IFRS), ideal for interchangeable goods. Disadvantages: masks price trends, less tax-efficient than LIFO, cannot track specific lots, requires recalculation after each purchase in perpetual systems.
No. Weighted average cost (WAC) is an inventory valuation method for physical goods. WACC (Weighted Average Cost of Capital) is a corporate finance metric for calculating a company's blended financing cost from debt and equity. They share the "weighted average" math concept but apply to completely different domains.
To average any values and weights, use the main weighted average calculator. For stock cost basis, use the weighted stock average calculator.
Specialized purpose-built weighted average calculators — each tailored to a specific domain with unique inputs, outputs, and interactive visualizations.
A weighted average cost calculator is a tool that computes the average cost per unit of inventory by weighting each purchase batch's unit cost by its quantity. It divides the total cost of all goods available by the total number of units, producing a single blended cost that reflects purchase volumes.
Multiply each purchase batch's unit cost by its quantity to get each batch's total cost. Sum all batch total costs. Sum all quantities. Divide the total cost by total quantity. For example: (500×$12 + 800×$9 + 200×$15) ÷ (500+800+200) = $16,200 ÷ 1,500 = $10.80 per unit.
WAC per Unit = Σ(Unit Cost × Quantity) ÷ Σ(Quantity). The numerator is the sum of each batch's total cost (unit cost times quantity), and the denominator is the total number of units across all batches.
Divide the total cost of goods available for sale by the total number of units available: Total Cost ÷ Total Units = WAC per unit. Each unit in inventory — regardless of when purchased — carries this same cost.
The weighted average cost method (AVCO) is an inventory valuation approach that assigns the same average cost to every unit. It blends all purchase prices by volume, and uses this blended cost for both COGS and ending inventory valuation. It is accepted under both GAAP and IFRS.
A simple average treats all purchase prices equally regardless of quantity. Weighted average cost multiplies each price by its quantity, giving more influence to larger purchases. If you buy 1,000 units at $5 and 10 units at $50, simple average = $27.50 but WAC = $5.45.
Use WAC when inventory items are interchangeable (commodities, bulk goods), when individual batch tracking is impractical, when you want to smooth price fluctuations, or when operating internationally (IFRS prohibits LIFO, making WAC or FIFO the only options).
WAC is typically calculated once at period end (periodic system). Moving average cost recalculates after every new purchase (perpetual system). Both use the same formula, but moving average provides a more current cost that changes with each purchase event.
FIFO (First In, First Out) assumes the oldest inventory is sold first, so COGS reflects older prices. WAC blends all prices together. In rising-price environments, FIFO produces lower COGS, higher ending inventory value, and higher profit than WAC.
LIFO (Last In, First Out) assumes newest inventory is sold first, producing higher COGS and lower profit in rising markets. WAC blends all costs. LIFO is prohibited under IFRS but allowed under US GAAP; WAC is accepted under both standards.
Use =SUMPRODUCT(CostRange, QuantityRange)/SUM(QuantityRange). For example: =SUMPRODUCT(B2:B10,C2:C10)/SUM(C2:C10) where B contains unit costs and C contains quantities. This works in both Excel and Google Sheets.
Yes. WAC is fully accepted under both US GAAP and IFRS (IAS 2). It is one of the most universally accepted inventory valuation methods globally. Notably, IFRS prohibits LIFO, making WAC and FIFO the only compliant options internationally.
WAC assigns the same blended cost to both COGS and ending inventory. In rising price environments, WAC COGS falls between FIFO (lower) and LIFO (higher), producing moderate profit. Ending inventory is valued at the same WAC per unit.
Advantages: simplifies record-keeping, smooths price fluctuations, accepted globally (GAAP + IFRS), ideal for interchangeable goods. Disadvantages: masks price trends, less tax-efficient than LIFO, cannot track specific lots, requires recalculation after each purchase in perpetual systems.
No. Weighted average cost (WAC) is an inventory valuation method for physical goods. WACC (Weighted Average Cost of Capital) is a corporate finance metric for calculating a company's blended financing cost from debt and equity. They share the 'weighted average' math concept but apply to completely different domains.