1. What is Weighted Average Purchase Price?

The weighted average purchase price calculates the average price paid for items when you've made purchases at different prices and quantities. It accounts for the varying quantities in each purchase to give a true average cost.

2. How Does the Calculator Work?

The calculator uses the weighted average formula:

Where:

• \( \text{Quantity} \) — Number of items purchased in each transaction
• \( \text{Price} \) — Price per item in each transaction
• \( \sum \) — Sum of all transactions

Explanation: Each purchase's total value (quantity × price) is summed, then divided by the total quantity purchased.

3. Importance of Average Purchase Price

Details: Knowing your average purchase price is crucial for inventory valuation, cost accounting, investment analysis (like dollar-cost averaging), and profit calculation.

4. Using the Calculator

Tips: Enter each purchase on a separate line as "quantity,price". Example:
10,25.50
5,30.00
20,22.75

5. Frequently Asked Questions (FAQ)

Q1: Why use weighted average instead of simple average?
A: Weighted average accounts for purchase quantities, giving more weight to larger purchases, which better reflects your actual average cost.

Q2: How is this different from V1/V2 calculators?
A: V3 allows multiple purchases to be entered at once and provides additional metrics like total quantity and total value.

Q3: Can I use this for stock investments?
A: Yes, this is commonly used to calculate the average price paid for shares purchased at different prices.

Q4: What if I have purchases in different currencies?
A: Convert all purchases to a common currency (like USD) before entering them.

Q5: How precise are the calculations?
A: Results are calculated to 2 decimal places (cents) for currency values.