3/23/2023 0 Comments Cogs 17 homework 3![]() Divide $7,000 by 30 and the weighted average is $233.33. The total cost of all the units is $7,000 and there are 30 units. Check out our video explanation at the bottom of the post! Weighted Average Inventory Example Let’s do the calculation to confirm that the weighted average will be the same. You might notice that the ratio of $100 units to $500 units is still the same (2:1). What if we had 20 units at $100 and 10 units at $500. When dealing with large numbers of units, rather than adding them up individually, we can calculate the total cost of the units and divide by the total number of units. We gave more weight to the $100 units because there were more of them. How would the average change if we sold two units at $100 and one at $500? The average would be closer to $100 because there are two units pulling the average down. Say we sold two units last month, one was $100 and one was $500. In accounting, weight is given based on the number of units. Your final exam might have more weight than a regular exam. Your professor is giving more weight to tests than to homework. Not all assignments count the same when calculating your final grade. In most classes, your grade is calculated using a weighted average. ![]() Weighted averages are all around us, although you may not have realized it. ![]() Most people know how to do a simple average, but have trouble with Weighted Average Inventory Method (or WAC). ![]()
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