Let me share some insights on how the average cost works, @sfreese70.

The average cost is the total amount of cost of all of the inventory you have divided by the number of items. The total bill of materials (BOM) cost would differ from the average cost if you purchased the BOM at different rates. 

QuickBooks also uses the weighted average cost to determine the value of the item and the amount debited to COGS when you sell it. This article discusses this a little further: Understand Inventory Assets And COGS Tracking 

Here's an example:

1. You purchase an item for $5.00. The average cost is $5.00.
2. You purchase a second item for $5.50. The average cost is now (5 + 5.5) / 2 = 5.25.
3. You sell an item. The inventory/COGS transaction debits COGS for $5.25 and credits inventory for $5.25.
4. You purchase another item for $5.00. Now your average cost is (5.25 + 5.00) / 2 = 5.13.

This is how QuickBooks determines the average cost. You can run the Inventory Valuation Summary report. This shows you how QuickBooks got the item's average cost.

1. Select Reports, then select Inventory.
2. Select Inventory Valuation Summary.
   
3. Set the dates to All.
4. Double-click the item.

Don't hesitate to visit us and post questions anytime you need help with inventory tracking. The QuickBooks Team is always here to answer them for you.