The Weighted Average Cost (WAC) is a method used to calculate the average cost of inventory or goods sold, taking into account the varying costs of different items. This approach assigns a weight to each item based on its quantity and cost, allowing businesses to determine a more accurate cost per unit. In practice, WAC is particularly useful for companies that deal with large volumes of similar products, such as in the case of manufacturing or retail. By using WAC, businesses can better manage their pricing strategies and financial reporting, ensuring that they reflect the true cost of their inventory.