Stock valuation – Weighted Average Pricing

P/S – My Sunday walk along Boat Quay today…

Hi class,

There are 2 general types of weighted average pricing ie.

a) Cumulative weighted average pricing
b) Periodic weighted average pricing

a) Cumulative weighted average pricing
– The average price is determined by dividing total cost by the total number of units.
– A new weighted average price is calculated everytime upon arrival of a new batch of materials into store – key feature

b) Periodic weighted average pricing
– For a certain period, a RETROSPECTIVE average price is calculated for all materials issued during the period.
– The issue price can only be determined upon closure of a certain period.
– How to calculate?

Opening stock value + Cost of all receipts within period
———————————————————————–
Opening stock in units + All receipts in units

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