Weighted average cost is one number for what a unit of an item costs you: the total cost of everything you've bought or made of it, divided by the total units those added. Each new purchase blends in at its own price, weighted by how many units it added. Buy 10 jars at $2.00 each and the average is $2.00. Buy 10 more at $3.00 and you hold 20 jars at an average of $2.50. The average does not reset when you run out, so an item you have used up keeps the cost you paid for it.
A purchase moves the average because it adds units at a new price. A sale does not: it takes units out at the current average, so the units left cost the same as before. The cost recorded on a sale is the average at the moment of that sale (a made-to-order line costs what its production used instead), which is why an older sale can show a different cost from the item's average today.
Ardent Seller uses weighted-average costing everywhere, so there are no lots to pick before you can see what your work costs. An item's average is worked out per location from its completed transactions, recipes add up their ingredients at those averages, and production runs carry the total into the finished goods. The Avg Cost column on your inventory lists shows the result.
Related terms
COGS (Cost of Goods Sold)
The total cost of materials, labor, and overhead directly tied to producing the goods you sell. Tracked automatically through purchases, recipes, and production runs.
Inventory Valuation
The total monetary value of all inventory currently in stock, calculated based on purchase costs. A key report for understanding the assets held in your business.
FIFO (First In, First Out)
A costing method that treats the oldest units in stock as the first ones sold, so cost of goods sold uses older prices. Ardent Seller averages costs instead.
Specific Identification
An inventory accounting method that tracks the actual cost of each individual item, rather than averaging or formula-based costs — ideal for one-of-a-kind goods.
Cost Basis
The total amount invested to acquire an item — purchase price plus associated costs — used to calculate profit and cost of goods sold when it sells.