The Average Unit Cost shown on the Stock tab of a Part reflects the weighted average cost of all units currently in inventory. It provides a stable, system‑wide valuation method that smooths out cost fluctuations from multiple receipts, making it easier to track part value over time and maintain consistent financial reporting.

 

How Average Unit Cost Is Calculated

The system calculates the value using a straightforward weighted‑average formula:
•     It adds together the individual costs of every unit currently on hand.
•     It divides that total by the number of units in inventory.
•     If the on‑hand quantity is zero, the Average Unit Cost is automatically 0, because there is no inventory value to average.

This method ensures that each new receipt influences the cost proportionally to the quantity received, preventing sudden spikes or drops that could occur with last‑cost or FIFO methods.