Compute periodic and moving average without rounding drift

The three invoice prices are $10, $12, and $14. Their simple mean is $12. That is not Cedar Trail's periodic average cost because the quantities differ.

Periodic: average the full pool

Cedar Trail has $2,840 of cost across 240 units:

$2,840 ÷ 240 = $11.833333 per unit

Assign that full-precision rate to 170 units sold and 70 ending units. Cost of goods sold is $2,011.67 and ending inventory $828.33 after display rounding. The unrounded values sum exactly to $2,840.

Perpetual: recompute after each purchase

After 60 units arrive at $12, the pool is 160 units costing $1,720, or $10.75 per unit. The 120-unit sale receives $1,290 cost. 40 units and $430 remain.

The next 80 units at $14 add $1,120, producing 120 units and $1,550 cost, or $12.916666 per unit. The 50-unit sale receives $645.83 at display precision. Total moving-average cost of goods sold is $1,935.83 and ending inventory is $904.17.

The difference is not an error. The late $14 purchase enters the periodic full-year pool and affects both sales; it was unavailable at the first sale date in the perpetual system.

Precision control

Store full-precision unit cost in the model and round only displayed currency. If operational systems require a stated rounding rule, carry the rounding difference in an explicit account or reconciliation rather than altering the last unit silently.

Recompute both schedules after moving Purchase 2 ahead of Sale 1. Predict which answer changes before running the workbook, then explain the change from availability rather than saying only “the formula is different.”

Follow the focused learning path

Start with the Cedar periodic and moving-average example. It shows both rates and both cost reconciliations for a short stream. Then complete the Northstar practice with independent quantities and costs. Use the larger Cedar Trail example later when comparing average cost with FIFO and LIFO.