Accounting Profitspear explains the Average Costing Method as a widely used inventory valuation technique where the cost of goods available for sale is divided by the total units available to determine a weighted average cost per unit. This method smooths out price fluctuations over time by assigning the same average cost to each unit sold or remaining in inventory, regardless of when it was purchased. At Profitspear, we help small businesses implement the average costing method to maintain consistency in financial reporting, simplify inventory management, and ensure accurate cost analysis fo