0
Its pretty simple. Think of 3 number A,B,C. If you want an average of these numbers - it would be : (A+B+C)/3 Now think of another situation : There are three numbers again A,B,C. However this time you think to reach a specific average you assign a weight to it x,y.z respectively. The average then comes to - (AXx +BXy + CXz)/(x+y+z) What is the utility? Heres one. Let us say you have a sales team of 2 people. You want to find out who among them is the best.Naturally you want to characterize them based on their sales ability. However its difficult to quantify ability correct. You can think of these as the important elements to arrive at a net figure: A = Percentage of direct calls. B = Percentage of achievement. Now you think the weight of importance for A is 60%( or x) , and B should be 40%( or y) ( or vice versa - depends on you) To calculate the weighted average would be : (A X x + B X y)/(x+y)
What else can I help you with?
What is the difference between average and weighted average?
weighted average is an average in which each quantity to be averaged is assigned a weight. These weightings determine the relative importance of each quantity on the average.
What is the abbreviation for weighted average?
WAVG
How do you calculate the weighted average in accounting?
To calculate the weighted average in accounting, you multiply each value by its respective weight, then add up all the results and divide by the sum of the weights.
What are some examples of when the FIFO and the weighted average inventory methods should be used?
The computation of equivalent units under FIFO method differs from weighted average method in two ways. First the units transferred out figure is divided into two parts. One part consists of the units from beginning inventory that were completed and transferred out, and the other part consists of the units that were both started and completed during the current period. Second full consideration is given to the amount of work expended during the current period on units in the beginning work in process inventory as well as units in the ending inventory. Thus, under the FIFO method, it is necessary to convert both beginning and ending inventories to an equivalent unit basis. For the beginning inventory, the equivalent units represent the work done to complete the units; for the ending inventory, the equivalent units represent the work done to bring the units to a stage of partial completion at the end of the period ( the same as with the weighted average method). The formula for computing equivalent units of production is more complex under FIFO method than under weighted average method. On December 31, 2006 Company appropriately changed to the FIFO cost method from The weighted-average cost method for financial statement and income tax purposes. the change will result in a $70,000 increase in the beginning inventory @January 1, 2006. Assuming a 40 Percent income tax rate, the cumulative effect of this accounting change reported for the year ended December 31,2006, is A. 700,000 B. 420,000 C. 350,000 D. 280,000 My Answer is 700,000/40%=280,000 Is any one have idea abourt FIFO cost method. Help is really appreciated
Who sets weighted average cost of capital?
It must be the managers
What is the difference between Average method vs weighted average method?
in weighted average method we assigns the weight to the averages while in average methods we dnt do this
What is Weighted Average of Inventory Valuation Method?
Weighted average inventory valuation method is method in which inventory purchased at any price is put together to calculate one price for allocation in contrast to FIFO or LIFO.
The inventory valuation method that tends to smooth out erratic changes in costs is?
Weighted average method which requires to use the weighted average cost per unit of inventory at the time of each sale.
What is the valuation method used for valuating inventory as per Indian accounting standards?
Majority of the companies are following weighted average method to value inventories. In India, the Income Tax authorities only allow FIFO & Weighted Average Method.
Inventory valuation method that tends to smooth out erratic changes in cost?
Weighted Average
What stock valuation method is acceptable according to the accounting standard fifo?
First stock should consumed first and then other stock. Majority of the companies are following weighted average method to value inventories. In India, the Income Tax authorities only allow FIFO & Weighted Average Method.
What is weighted average method of inventory management?
The total value of material divided by the total quantiy of stock
When using the weighted-average method of taking inventory the last step is to divide the total of all purchases by the?
When using the weighted-average method of inventory valuation, the last step is to divide the total cost of all purchases (including beginning inventory) by the total number of units available for sale. This calculation results in the weighted-average cost per unit. This average cost is then used to value the ending inventory and the cost of goods sold.
What is the difference of evaluation of inventory between weighted average method and FIFO method?
A method of inventory accounting in which the oldest remaining items are assumed to have been the first sold. In a period of rising prices, this method yields a higher ending inventory, a lower cost of goods sold, a higher gross profit (assuming constant price), and a higher taxable income. Also called FIFO.Method in calculation in which the weighted averagezzor the period is the cost of the goods available for sale divided by the number of units available for sale. When the perpetual inventory system is used, the weighted average method is called the moving average method.
Weighted average atomic mass?
What is weighted average atomic number
What are the advantages of the weighted average method?
The weighted average method is advantageous because it smoothens out fluctuations in inventory costs by incorporating both old and new cost data. It is simple to calculate and less subject to distortions from extreme price changes. This method is also compliant with generally accepted accounting principles (GAAP).
What is weighted average inventory method?
The weighted average inventory method is an accounting approach used to value inventory by averaging the costs of all items available for sale during a specific period. Under this method, the total cost of goods available for sale is divided by the total number of units available, resulting in a weighted average cost per unit. This average cost is then used to determine the cost of goods sold and the ending inventory value. It smooths out price fluctuations over time, making it particularly useful for businesses with large volumes of similar items.
