Moving weighted average cost
Cumulative weighted average costing, also called moving average, recalculates an inventory unit cost after each new receipt. Add the cost of the receipt to the cost of units already held and divide by the combined units. Issues after that receipt use the new average until another receipt changes it. This is commonly used with perpetual inventory records.
Worked example
Ten units at $4 remain when 30 units at $6 arrive: the new average is $220 ÷ 40 = $5.50, used for the next issue.
Common mistake
Do not recalculate an average merely because units are issued, or use purchases arriving later to price an earlier issue.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Supporting | July 2027–August 2028 |
| ACCA | F2 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: Moving weighted average costing, Cumulative weighted average costing