Accounting
Weighted Average
Definition
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4 Related Terms
What is Weighted Average?
Weighted Average is an inventory valuation method where the average cost of all units available for sale during a period is used to value both cost of goods sold and ending inventory. The average is recalculated after each purchase at different costs. This method smooths out price fluctuations and is widely used in businesses with homogeneous inventory. In Tally, weighted average is a popular cost tracking method that automatically calculates average cost per unit.
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