The Weighted Average is an optional Costing Method that can be chosen on the Above-Store Actual vs Theoretical Analysis report and is a more advanced Costing Method used for calculating Inventory Costs due to the fact that it considers __quantity__ at the time the cost is recorded.

To understand **Weighted Average**** **better, let's take a look at the example below. This example lists the count details for a period, which spans the month of February, and begins with 3 cases of potatoes at $16.00/case from January's Ending Inventory Count.

Date | Units | Price Per Unit | Total Value | Description |

January 31 | 3 | $16.00 | $48.00 | Beginning Inventory |

February 2 | 10 | $20.00 | $200.00 | Purchased |

February 9 | 10 | $18.00 | $180.00 | Purchased |

February 16 | 10 | $22.00 | $220.00 | Purchased |

Total | 33 Cases | $76.00 | $648.00 | – |

At the end of the month, the system will calculate the **per-unit weighted average **of the Beginning Inventory and all purchases.

[(3 x $16.00) + (10 x $20.00) + (10 x $18.00) + (10 x $22.00)] / (3 + 10 + 10 + 10) = $19.64 per case |

**OR**

$648 / 33 Total Cases = $19.64 per case |

If the ** Standard Average** is used, then the calculation of the above numbers would be as follows:

( $16.00 + $20.00 + $18.00 + $22.00) / 4 = $19.00 per case |

At the end of the month, the final count is **12 cases**. In using the per case cost, the amounts will be listed as follows:

**Weighted Average:**12 cases x $19.64 per case =**$235.68****Standard Average:**12 cases x $19.00 per case =**$228.00**

There is roughly a **$7 variance **between the Weighted Average and the Standard Average in this scenario. Using the Weighted Average rather than the Standard Average provides a greater level of precision when calculating costs.