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Average Cost Definition - What is Average Cost?

Average cost definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Average cost can be defined as: Also called weighted average. Method for assigning inventory cost to sale; the cost of available-for-sale units is divided by the number of units available to determine per unit cost prior to each sale that is then multiplied by the units sold to yield the cost of that sale. Average cost if an inventory cost flow assumption, average cost method not specifically identifying the inventory that is sold. The average cost method creates an average cost for the inventory on hand and assumes units sold to be at this average. A cost flow assumption method like average cost method is used when we have inventory units that are much the same. Why Learn Accounting - Financial Accounting / Managerial Accounting    • Why Learn Accounting - Accounting Beg...   101 Double Entry Accounting System Explained - Accounting Equation    • Double Entry Accounting System Explai...   101 Cash vs Accrual - Cash Method / Accrual method differenc    • 101 Cash vs Accrual - Cash Method / A...   101 Revenue Recognition Principle    • 101 Revenue Recognition Principle   Double Entry Accounting System Explained - Balance Sheet    • Double Entry Accounting System Explai...   101 Income Statement Introduction    • 101 Income Statement Introduction   101 Accounting Objectives - Relevance Reliability Comparability    • 101 Accounting Objectives - Relevance...   101 Transaction Rules - Accounting Equation    • 101 Transaction Rules - Accounting Eq...   101 Transaction Throught Process / Steps - Accounting Equation    • 101 Transaction Thought Process / Ste...   101 Owner Deposits Cash Transaction Accounting Equation    • 101 Owner Deposits Cash Transaction A...   101 Work Completed for Cash Transaction Accounting Equation    • 101 Work Completed for Cash Transacti...   100.110 Pay Employee with Cash Transaction Accounting Equati    • 100.110 Pay Employee with Cash Transa...   200 Debits & Credits Normal Balance - Double Entry Accounting Sy    • 200 Debits & Credits Normal Balance -...   200 Debits & Credits - One Rule to Rule Them All    • 200 Debits & Credits - One Rule to Ru...