Average pricing implementation in a POS application?

Question

I am developing a POS (Point of Sale) application which should be able to calculate average price. Here is the deal, i don't know what it is and how it is calculated for consumer products. I just got this requirement. All i know is this, that there is no way to know from which particular stock of goods, an item was sold from (i.e. when stock keeps getting replenished). Has anyone done anything similar, please help me out on this. or if you could suggest me to some resource. I am not very good with business vocabulary so please ask me again if there are ambiguities in this problem statement.

Answer 1

Average Price is a weighted average of the different prices and quantieties paid by different consumers. Suppose you have 3 customers, Adams Brown and Cook. Adams buys 10 at $5. Brown buys 20 at $4.50 and Cook buys 30 at $5.00 at total of 60 units are sold 1/6 are sold at 5 1/3 at 4.50 and 1/2 at 4. the average price = (1/6)*5 + (1/3)*4.5 +(1/2)*4 = = $13/3.

I think you are getting confused with "cost of goods sold". In that case, you need to know the accounting method, FIFO (first in first out) or LIFO (Last in First out). That is another whole ball of wax.