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what is weighted average method. Investors can use it to track the cost basis for investments where First-In First-Out FIFO or Last-In First-Out LIFO cost bases arent used. The weighted average of values is the sum of weights times values divided by the sum of the weights.
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The weighted average method is most commonly employed when inventory items are so intertwined that it becomes difficult to assign a specific cost to an individual unit. The weighted average cost under this method is obtained by dividing the total value at cost of materials in stock at the time of issue by the total quantity of materials in stock. Not all assignments count the same when calculating your final grade.
The weighted average method is a method of determining the average cost of a product or investment.
How to calculate inventory weighted average cost. Weighted Average Cost WAC method estimates the amount distributed into inventory and the COGS through weighted average. When to Use a Weighted Average Most people are familiar with the method of finding the average or the arithmetic mean of a series of items. This method uses a weighted average to determine the amount of money that goes into COGS and inventory.
