I don't understand how average cost

[lizzel]

I have a small shop where for example I sell coke and I have its cost as 1€ and sale price for 2.50€. I don't understand how advanced inventory will change this and I'm not sure if I want it to. The guide doesn't really make it clear for me. Could someone explain in an easy way please? 

 

Thanks. 

[Angelika]

Hello! The Average cost will be calculated automatically when you receive items using the advanced inventory functionality.

The value of the item's average cost after receiving new items (NewCost) is calculated as:

StockBefore - stock before receiving new items
StockAdded - quantity of received new items
CostBefore - cost before receiving new items
CostOfAdded - cost of received new items

This value of the cost will be used in all the reports and calculations of all other values.