The formula for finding the weighted average is the sum of all the variables multiplied by its weight then divided by the sum of the weights. The weighted average method is one of the most common methods of inventory and cost accountingIt is also known as Average Cost Method or AVCOIt is an alternative to FIFO first in first out and LIFO last in first out which are other commonly used cost accounting methods. Since the calculation is done at the end of the period we figure out the total cost of goods available for sale and divide by the number of units.
Observe that the average can be calculated directly only if the weights of all the factors are the sameIf the values a b c and d are the individual averages of each of the groups and n1 n2 n3 and n4 are the numbers of observations or number of values then the Weighted Average is calculated by the below Weighted Average Formula.
Finding weighted average using method of deviations. The weighted average method is one of the most common methods of inventory and cost accountingIt is also known as Average Cost Method or AVCOIt is an alternative to FIFO first in first out and LIFO last in first out which are other commonly used cost accounting methods. Weighted average periodic is probably the easiest of all the inventory methods. To calculate WACC the analyst will multiply the cost of each capital component by its proportional weight.