Average cost is the average cost of the part to your shop. This cost is used when the part is added to for estimates and repair orders.
Average cost is based on the Item Size and the Cost from the 1st, 2nd, and 3rd suppliers.
When you first enter the part, the average cost is the cost from the 1st supplier. Over time, the average cost is updated as the part is used and ordered from the 2nd and 3rd suppliers.
In addition, if the cost from the supplier is different when the part is received, the average cost is updated automatically.