Cost price averaging is a powerful feature to have an accurate representation of profit. This feature is accessed by using the receivings module after setting up the required information in store config (described below)

Enable cost price averaging

To enable cost price averaging select Store Config/Settings and then find the checkbox "Calculate Average Cost Price from Receivings" and check it on. From here you will be presented with another option "Averaging Method". Pick either Moving Average (Recommended) or Historical Average.

Averaging methods explained

Moving Average

Moving average is calculated by using the current cost price and inventory count and is averaged with the current amount received and quantity. It is a very simple yet accurate calculation of cost price

Historical Average

Historical average uses all past data about receivings for an item and calculates a brand new average using all data points about when an item has been received.