Overview
The weighted average closing value for stock is calculated using the Opening Value, plus the Approved Purchase Value divided by those Total Quantities of Opening Stock and Approved Stock. Transfers do not affect the weighted average. The weighted average is a rolling weighted average.
Example 1: What is the weighted average?
Fig.1 - How the system works out the weighted closing value of stock
- A product’s opening value is £100
- It is approved into the system at a cost of £200 (either as a new price or as an edited price upon receipt)
- When counting the stock, the system works the closing value out to be £150 if using the above figures. This will be the closing value of the stock
(Opening stock value + Purchase value) ÷ (Opening stock quantity + purchase quantity)
(£100+£200) ÷ (1+1) = £150
= Weighted average value for the period closing stock
(£100+£200) ÷ (1+1) = £150
= Weighted average value for the period closing stock
The closing value carries forward to become the opening value of the next stock period and so on.
The weighted average can be altered in error if cost prices are edited upon receipt of delivery and a user enters incorrect figures and approves the delivery into stock. This can have significant impact on the cost of sale figure (and therefore GP) generated at the end of the period as the closing stock value of affected products can be inflated or deflated. It is possible to reset the weighted average per product if any errors occur. If the weighted average is reset, then the system will close using the value from the Allocated Supplier for that product at that site.
Example 2: Impact of resetting the weighted average
Fig.2 - How the system works out the reset weighted closing value of stock
- A product’s opening value is £100
- It is approved into the system at a cost of £200 (either as a new price or as an edited price upon receipt)
- When counting the stock, the system works the closing value out to be £100 because the weighted average was reset before closing the period
Resetting a Weighted Average
A product's weighted average may require resetting if the closing value has been accidentally or dramatically changed due to incorrect pricing or a change in a unit of measurement.
A product's weighted average may require resetting if the closing value has been accidentally or dramatically changed due to incorrect pricing or a change in a unit of measurement.
- Log in to Inventory and select the Master Data tab
- Search for and select the product for which the weighted average is to be reset
Fig.3 - Searching for and selecting a product form the Master Data tab
- Go to the Stock Details tab
- Use the magnifying glass icon, select the 'top level' site and then select
Search
Fig.4 - Selecting the top level site
The product will then be listed at all Units/Sites where it is used.
- Tick the Reset AWC box(es) as required and then select Save
- 'AWC' stands for 'Average Weight Cost'
Fig.5 - Ticking Reset AWC boxes and saving
This will then reset the weighted average to the cost price on the Recipe & Menu Engineering (if used).
Be careful when resetting all product weighted averages as it can bring the total closing value of stock up or down in one period, which can inflate or decrease the Actual COS for the period.
Please note: When closing a stock period it will only calculate the cost of the product at the point of closing the stock period, and will not take into account any price changes of that product throughout the period up until that point.
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