Under weighted average method of material issue, we calculate total cost of material and then it is divided by total units of our material. After this, we can get weight average price and we issue the material at this price. In weighted average method, we give the weight on quantity of material issue, so it is better than simple average method, because with giving weight, we can obtain more representative price of material bought in different times.
Simple Steps to Calculate Weighted Average Price of Material Issue
1st step : To calculate total cost of material
500 units bought @Rs. 3 = 1500
600 units bought @ Rs. 4 = 2400
200 units bought @ Rs. 2 = 400
----------------------------------------
total cost of material = Rs. 4300
______________________________
total no. of units = 1300 units
Weighted Average Price = Total cost / total units = total of WX/ total of W
= 4300/1300 = Rs. 3.30
Simple Steps to Calculate Weighted Average Price of Material Issue
1st step : To calculate total cost of material
500 units bought @Rs. 3 = 1500
600 units bought @ Rs. 4 = 2400
200 units bought @ Rs. 2 = 400
----------------------------------------
total cost of material = Rs. 4300
______________________________
total no. of units = 1300 units
Weighted Average Price = Total cost / total units = total of WX/ total of W
= 4300/1300 = Rs. 3.30
