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*The other method is to continually calculate the average to account for purchases and sales throughout the year, with a final adjustment at year-end to account for inventory shrinkage (this method is also called "moving average"). With the advent of computerized inventory and accounting software this method is the most commonly used.
*The other method is to continually calculate the average to account for purchases and sales throughout the year, with a final adjustment at year-end to account for inventory shrinkage (this method is also called "moving average"). With the advent of computerized inventory and accounting software this method is the most commonly used.
===Example==
===Example===
Using the garden center example above, the weighted average cost at the beginning of the year is as follows: (10 units x $10) + (10 units x $12) + (10 units x $14) = $360 / 30 units = $12/unit.
Using the garden center example above, the weighted average cost at the beginning of the year is as follows: (10 units x $10) + (10 units x $12) + (10 units x $14) = $360 / 30 units = $12/unit.