The
Definition Of

Average-cost method

Average-cost method is an inventory costing method that uses the weighted average unit cost to allocate to ending inventory and cost of goods sold the cost of goods available for sale. The average-cost method assumes that goods are similar in nature.

Share it:

More from this Section

  • Enterprise resource planning (ERP) systems
    Enterprise resource planning (ERP) systems are typically used by manufacturing companies with more than 500 employees and $500 million in sales.
  • Book-keeping
    Book-keeping is the art of recording the transactions on the books of original entry and the ledgers. This work is usually performed
  • Error of commission
    When a transaction has been recorded but has been wrongly entered in the books of original entry or in the ledger, error of
  • Contribution margin
    Contribution margin is the amount of revenue remaining after deducting variable costs. It is often stated both as a total amount and on a per unit basis.
  • Outstanding stock
    Outstanding stock means the number of shares of issued stock that are being held by stockholders.
  • Return on common stockholders' equity
    A widely used profitability ratio is return on common stockholders’ equity. It measures profitability from the common stockholders viewpoint
  • Direct labor quantity standard
    The direct labor quantity standard is the time that should be required to make one unit of the product. This standard is especially critical in labor-intensive companies.