alleryUnder weighted average method, value per unit at issue is computed as:
ALatest purchase price always
BStandard fixed unit cost
CCost of earliest lot left
DTotal cost ÷ total units
Answer & Solution
Correct answer: D. Total cost ÷ total units
1. Weighted average recomputes a per-unit cost after each receipt: total cost on hand ÷ total units on hand.
2. Issues then use this current weighted average until next receipt changes the mix.
3. It smooths price fluctuations vs FIFO/LIFO.
_Source: ICAI BoS Foundation Paper 1, Ch 4 "Inventories", §5.1 (iv)_
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