What is 'weighted average price' in SAP FIN-BAC-INV - Inventory Accounting?

weighted average price - Overview

• Component: FIN-BAC-INV

• Component Name: Inventory Accounting

• Description: Periodic cost flow assumption.

weighted average price - Details

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  Key Concepts: 
  Weighted Average Price (WAP) is a method used in SAP Inventory Accounting to calculate the value of inventory items. It is based on the average cost of all goods purchased or produced during a certain period. The WAP is calculated by dividing the total cost of all goods by the total quantity of goods. 
  
  How to use it: 
  In SAP Inventory Accounting, the WAP is used to determine the value of inventory items. This value is then used to calculate the cost of goods sold and the inventory balance. The WAP can be calculated manually or automatically using the SAP system. 
  
  Tips & Tricks: 
  When calculating the WAP manually, it is important to ensure that all costs are included in the calculation. This includes any discounts, taxes, and other costs associated with purchasing or producing the goods. Additionally, it is important to ensure that all goods are accounted for in the calculation. 
  
  Related Information: 
  The WAP can be used in conjunction with other methods of inventory valuation such as FIFO (First In First Out) and LIFO (Last In First Out). Additionally, it can be used to calculate inventory turnover and other financial metrics related to inventory management.