Average Cost is based on the existing pool of quantity on hand at the current average cost and is revised as new quantities get added at a different price based on the grand total of the new pool. It is not based on 13 weeks of history, but only what is actually in inventory. If you take the inventory down to zero and then buy 10 @ $12.50, then $12.50 becomes the Average Cost of that new pool of 10 items (as it should). Then buy 1 more of the same item at $15.00, and your total pool is now 10x$12.50 = 125.00 + 1x$15.00 = $140.00 total cost pool divided by the new total quantity of 11, gives a new Average Cost of the entire pool of 11 at $12.727.