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What are the advantages and disadvantages of weighted average method?

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What are the advantages and disadvantages of weighted average method?
posted Jun 13, 2017 by Sagar Sharma

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1 Answer

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Advantages

• Since, the receipts are much less frequent than issues; the method is not so cumbersome
because calculation of new prices arises only when fresh lots are purchased.
• This method evens out the effect of widely varying prices of different consignments.

Disadvantages

• Issues may not be at the current economic values.
• Where receipts are numerous this method requires a good deal of calculations.
• Profit or loss may arise out of pricing.
• Issue price may run to a number of decimal points.

answer Jun 13, 2017 by Naveen Kumar
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