Weighted Average Cost

Weighted Average Cost (WAC) is a financial metric that calculates the average cost of inventory or assets by taking into account both the cost of individual items and their proportion in total inventory. It combines the costs of different batches or sources into a single average, reflecting the overall expense for acquiring or producing goods. This helps businesses determine the current value of inventory or the cost of goods sold more accurately, especially when prices fluctuate or multiple purchase prices are involved. Essentially, WAC provides a balanced view of costs based on the relative significance of each component.