Average Calculator Price

Weighted Average Price Calculator

Enter quantities and prices above and click "Calculate" to see the weighted average price.

function calculateAveragePrice() { var quantity1 = parseFloat(document.getElementById('quantity1').value); var price1 = parseFloat(document.getElementById('price1').value); var quantity2 = parseFloat(document.getElementById('quantity2').value); var price2 = parseFloat(document.getElementById('price2').value); var quantity3 = parseFloat(document.getElementById('quantity3').value); var price3 = parseFloat(document.getElementById('price3').value); var resultDiv = document.getElementById('averagePriceResult'); // Input validation if (isNaN(quantity1) || isNaN(price1) || isNaN(quantity2) || isNaN(price2) || isNaN(quantity3) || isNaN(price3) || quantity1 < 0 || price1 < 0 || quantity2 < 0 || price2 < 0 || quantity3 < 0 || price3 < 0) { resultDiv.innerHTML = 'Please enter valid positive numbers for all quantities and prices.'; return; } var totalCost = (quantity1 * price1) + (quantity2 * price2) + (quantity3 * price3); var totalQuantity = quantity1 + quantity2 + quantity3; if (totalQuantity === 0) { resultDiv.innerHTML = 'Total quantity cannot be zero. Please enter at least one item with a quantity greater than zero.'; return; } var weightedAveragePrice = totalCost / totalQuantity; resultDiv.innerHTML = 'Weighted Average Price: $' + weightedAveragePrice.toFixed(2) + '' + 'Total Cost: $' + totalCost.toFixed(2) + '' + 'Total Quantity: ' + totalQuantity.toFixed(0) + ''; }

Understanding the Weighted Average Price

The Weighted Average Price Calculator helps you determine the average cost of items when you've purchased them at different quantities and prices. Unlike a simple average, which just adds up prices and divides by the number of price points, a weighted average considers the quantity associated with each price, giving a more accurate representation of your true average cost.

Why is Weighted Average Price Important?

This calculation is crucial in several scenarios:

  • Inventory Valuation: Businesses often buy the same product at different times and prices. The weighted average cost method is a common way to value inventory and calculate the cost of goods sold.
  • Budgeting and Planning: Understanding your average cost helps in setting future budgets, pricing strategies, and evaluating the profitability of sales.
  • Personal Finance: If you're buying a bulk item or a stock over time, knowing the weighted average price helps you understand your overall investment cost.
  • Comparing Deals: When comparing different suppliers or purchase options, this calculator can help you see the overall impact on your average cost.

How the Calculator Works

The calculator uses a straightforward formula:

Weighted Average Price = (Total Cost of All Items) / (Total Quantity of All Items)

Where:

  • Total Cost of All Items is the sum of (Quantity of Item * Price per Item) for all different purchases.
  • Total Quantity of All Items is the sum of all quantities purchased.

Example Calculation

Let's say you made the following purchases for a specific item:

  • Purchase 1: 10 units at $5.50 per unit
  • Purchase 2: 15 units at $6.00 per unit
  • Purchase 3: 5 units at $5.25 per unit

Here's how the calculation breaks down:

  1. Cost of Purchase 1: 10 units * $5.50/unit = $55.00
  2. Cost of Purchase 2: 15 units * $6.00/unit = $90.00
  3. Cost of Purchase 3: 5 units * $5.25/unit = $26.25
  4. Total Cost: $55.00 + $90.00 + $26.25 = $171.25
  5. Total Quantity: 10 + 15 + 5 = 30 units
  6. Weighted Average Price: $171.25 / 30 units = $5.7083 (approximately $5.71)

As you can see, the weighted average price of $5.71 is different from a simple average of the prices ($5.50 + $6.00 + $5.25) / 3 = $5.58, because it correctly accounts for the larger quantities purchased at higher prices.

Use the calculator above to quickly find the weighted average price for your own item purchases!

Leave a Reply

Your email address will not be published. Required fields are marked *