#### Moving Weighted Average Cost

The Moving Weighted Average Cost (MWAC) is a perpetual, moving, weighted calculation of inventory and is generally used where it is not possible to distinguish which items in stock have been bought from which purchases. That is, they are mixed together, not batch or serial tracked, and when an item is consumed from inventory you don’t know if that item was from the first purchase or the most recent purchase.

The MWAC is recalculated for an individual item every time stock is added. As more and more items are bought, the MWAC moves closer and closer to the purchase price, in comparison to the ratio of the quantity of items bought versus the quantity of items still in stock at the time of purchase. When stock is consumed, it is consumed at the current weighted average cost.

When an item is purchased, MWAC is calculated as follows:

MWAC = (value_of_stock_before_purchase + value_of_new_stock_purchased) / (quantity_of_stock_before_purchase + quantity_of_new_stock_purchased)