{"id":11889,"date":"2021-12-03T11:10:24","date_gmt":"2021-12-03T05:40:24","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=11889"},"modified":"2024-12-24T20:43:53","modified_gmt":"2024-12-24T15:13:53","slug":"weighted-average-inventory-method","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/weighted-average-inventory-method\/","title":{"rendered":"Weighted Average Inventory Method | Free Cost Accounting Articles"},"content":{"rendered":"\n

Weighted Average Inventory Method<\/mark><\/h2>\n\n\n\n
\"Weighted
Weighted Average Inventory Method<\/strong><\/figcaption><\/figure>\n\n\n\n

Weighted Average Inventory Method<\/strong><\/p>\n\n\n\n

This method gives due importance to the quantity of material in stock. Under this method issue price of the material is calculated by dividing the value of materials in stock by the quantities of material in stock<\/p>\n\n\n\n

Rate of Issue = Value of material in stock \/ quantities of material in stock<\/strong><\/p>\n\n\n\n

Weighted average<\/a> rate is calculated each time when a fresh lot is received. It remains the same till the next lot is received. Thus issue prices are calculated at the time of receipt of material and not all the times of issue of material.<\/p>\n\n\n\n

This method is useful, where the purchase price and quantities of material are widely different.<\/p>\n\n\n\n

The weighted average method is quite superior to other methods and it is better to follow this method. This method can be used with advantage in those cases where price and quantity vary widely. The average rate does not change with the issue but would vary with a fresh supply of materials received when a new average will have to be calculated, in a period of fluctuating price this method will even out the fluctuations. This method is also goods as the weighted average rate lies in between the extreme rates as shown by FIFO and LIFO methods. However, the difficulty is that fresh calculations are needed at every purchase of materials or goods.<\/p>\n\n\n\n