When adding new inventory item, what does the average cost mean when select starting balance? what is the difference between purchase cost and average cost ?
Purchase cost is what you pay per unit when purchasing an inventory item at any given time. Average cost is the total cost invested in that item of inventory divided by the number of units owned. So, for example, you might buy a widget normally for 100 each and have 200 on hand. The purchase cost of those 200 is 100 per unit. Now you buy 100 more, but have to pay 110 each for them. Total investment in widgets is:
(100 x 200) + (110 x 100) = 31,000
Average cost is now:
31,000 / 300 = 103.33
Do I have to fill it manually ?
Yes. But you should only check the box for a starting balance if you are migrating to Manager from a previous accounting system and the inventory item was already in stock at the time of transition. In that case, you should enter the average cost as of closing of the previous accounting system. You should not have to calculate this manually.
I see from your profile that you joined the forum three years ago. I assume you started using Manager around that time. If you are adding a new inventory item now, leave the box for starting balance unchecked. Average cost will be calculated automatically from your payments or purchase invoices, however you purchased the item. Be sure you have read this Guide: Manager Cloud.