Average Cost Accounting is a method of inventory valuation which assigns the same unit cost for every unit of inventory purchased or produced. This method assumes that the average cost of all inventory items is the same, regardless of when they were purchased or produced. In other words, if you buy 10 widgets for $1 each and another 10 widgets for $2 each, your average cost per widget is $1.50. This method can be useful in situations where the exact cost of each item is difficult to track. By using this method, companies can quickly determine their overhead costs and profits in an efficient manner.