Weighted average cost (WAC), the periodic method, gives you one average unit cost for a whole accounting period. You add your opening inventory value to the cost of every purchase in the period, then divide by the total units available for sale. The formula: WAC = (cost of opening inventory + cost of all purchases) / (opening units + all units purchased). You apply that single figure to every unit sold (COGS) and to every unit left on hand (ending inventory). Use the calculator below, and see the full concept guide for more.
A free tool to work out one blended cost per unit for the period, then your cost of goods sold and ending inventory from it.
If you buy the same item at a few different prices over a quarter or a year, you eventually have to answer one question at period end: what did a unit cost, on average, across everything you had available to sell? Weighted average cost is the plain answer. You pool the whole period’s cost, pool the whole period’s units, and divide. One number comes out, and that number values both what you sold and what is still on the shelf.
Most people who reach for a calculator just want to check their own figures, so the tool is first and the explanation is second. There is also a section below on when the periodic version is the right fit and when a running average or a spreadsheet does the job.
Weighted average cost calculator
What is weighted average cost (periodic method)?
Weighted average cost is an inventory valuation method used in a periodic inventory system: you calculate the cost once, at the end of the accounting period, rather than after every transaction. You take everything that was available to sell during the period, that is your opening inventory plus every purchase, and you work out a single blended cost per unit for the lot. The full concept guide goes deeper with more examples.
The appeal is that it smooths out price swings. If one shipment came in cheap and the next came in dear, WAC does not force you to track which units came from which lot. It treats every unit as interchangeable and gives all of them the same cost, which is often exactly how a business thinks about a bin of identical parts or a batch of the same finished good.
The WAC formula (periodic system)
WAC per unit = (cost of opening inventory + cost of all purchases in the period) / (opening units + all units purchased in the period).
The denominator is your total units available for sale. The numerator is your total cost of goods available for sale. Once you have the single WAC figure, you use it twice: multiply it by units sold to get cost of goods sold, and multiply it by units remaining to get ending inventory value.
Worked example, step by step
Using the numbers from the Qoblex weighted average cost guide so you can check the tool against a published source, then extended to show COGS and ending inventory:
- Opening inventory: 100 units at $10.00 each, so $1,000.00.
- Purchase during the period: 200 units at $12.00 each, so $2,400.00.
- Total units available for sale: 100 + 200 = 300 units.
- Total cost of goods available for sale: $1,000.00 + $2,400.00 = $3,400.00.
- WAC per unit: $3,400.00 / 300 = $11.33 (the guide rounds this to $11.00).
Now apply that one figure. Say you sold 250 units in the period:
- Cost of goods sold: 250 x $11.33 = $2,833.33.
- Ending inventory: 50 units left x $11.33 = $566.67.
- Check: COGS + ending inventory = $2,833.33 + $566.67 = $3,400.00, which ties back to the total cost of goods available for sale.
That reconciliation, COGS plus ending inventory equalling total cost available, is the sanity check that tells you the period is balanced. Load the calculator above with these figures and you should land on the same numbers.
Weighted average cost vs moving average cost, the one difference
This is the distinction that matters, because the two methods share the same blended-average idea and get confused constantly. Weighted average cost (periodic) recalculates once, at period end, using the whole period’s purchases in one pool. Moving average cost (perpetual) recalculates after every single purchase, so the average is always current and each sale is costed at the average in force at that moment.
Same averaging logic, different timing. Periodic WAC is simpler to run and gives you one clean number per period. Perpetual MAC gives you a live cost per unit at any point in time, which you need if you value inventory continuously or report COGS mid-period. If you want the running version instead of the period-end version, use the moving average cost calculator, which recalculates after each purchase.
When to use periodic weighted average cost, and when another method fits better
Periodic WAC is not the right amount of effort for every business, and it is not always the most accurate. Here is an honest read on where it earns its place.
When periodic WAC is a good fit
It fits when your purchase costs move around but you value inventory at period end anyway, on a monthly, quarterly, or annual cycle. If you count stock periodically rather than tracking every movement in real time, periodic WAC matches how you already work. It is the least fiddly of the cost methods: one calculation, one number, applied evenly. And it deliberately smooths price volatility, so a single expensive shipment does not distort the cost of everything you sold that period.
When a spreadsheet is genuinely enough
If you carry a small number of SKUs, your prices are fairly stable, and you close the books on a simple cycle, a spreadsheet does this job perfectly well. The formula is one line: total cost divided by total units. Spreadsheets are how most businesses start costing their stock, and for a stable, low-volume catalogue they stay accurate for a long time. The point where they stop keeping up is worth naming plainly: when you carry many SKUs, when purchases get frequent, or when you need a current cost per unit between period ends rather than one figure after the count. Keeping all of that true by hand becomes its own job.
When moving average cost fits better
If you need a cost per unit that is correct on any given day, not just at period close, the periodic method will not give it to you: between calculations, your recorded cost is stale. That is the case for reporting COGS in real time or valuing inventory continuously. For that, the perpetual moving average cost method re-blends after every purchase so the number is always current.
When FIFO fits better
If you want ending inventory valued at your most recent costs, or you are in an industry where you have to trace specific physical lots, FIFO may suit you better than any average method. Note that FIFO as an accounting method is a separate thing from first-expired-first-out picking on the warehouse floor, which is about the physical rotation of perishable stock, not cost. A quick note on LIFO: it is prohibited under IFRS, so for most businesses outside the US the practical choice is between an average method and FIFO.
How Qoblex handles inventory costing
The calculator above is a period-end simulator you drive by hand. Inside Qoblex, inventory costing runs on your live data instead of a figure someone maintains in a sheet. Your accounting platform stays your book of record: Qoblex handles the operational inventory costing while QuickBooks Online or Xero keeps the ledger. For current plans, see qoblex.com/pricing.
FAQ
What is the weighted average cost formula? WAC per unit = (cost of opening inventory + cost of all purchases in the period) / (opening units + all units purchased in the period). You then multiply that single figure by units sold to get cost of goods sold, and by units remaining to get ending inventory value.
How is weighted average cost different from moving average cost? Weighted average cost, the periodic method, recalculates once at the end of the period using the whole period’s purchases in one pool. Moving average cost, the perpetual method, recalculates after every purchase so the average is always current. Same averaging logic, different timing.
Is weighted average cost periodic or perpetual? Weighted average cost is the periodic version: one average for the whole period. The perpetual version, recalculated after each purchase, is moving average cost.
How do I calculate COGS with weighted average cost? Work out the single WAC per unit for the period, then multiply it by the number of units sold. The units left on hand, multiplied by the same WAC, give your ending inventory value. The two should add back to your total cost of goods available for sale.
Is weighted average cost allowed under IFRS? Yes. Both weighted average (periodic) and moving average (perpetual) are permitted under IFRS and US GAAP. LIFO is not permitted under IFRS, so for businesses under IFRS the standard options are an average method or FIFO.
Can I use a spreadsheet instead of software for weighted average cost? For low volume, a small SKU count, and stable prices, yes: total cost divided by total units is a one-line formula. It gets harder as SKU count and purchase frequency rise, or when you need a current cost per unit between period ends rather than one figure after the count.