COMMERCE 1AA3 Lecture Notes - Lecture 19: Weighted Arithmetic Mean

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 1AA3
• Professor: Aadil Merali Juma

Document Summary

With large and expensive inventory items. it is easy to track the cost of each individual item. It is expensive to track individual items, but it is done for unique or very expensive items. Cost of goods available for sale - cost of goods sold or. If you are producing items that are identical (ie. iphones, bottles) then you do not use this method. Using fifo, you would use the rst batch"s price. Using lifo, you would use the last batch"s price. Using weighted average, you would use the average across all purchases. Under fifo, perpetual and periodic give the exact same answers for cost of goods sold and. Under weighted-average cost (aka static average) periodic, cost of goods sold is: [ (cost of goods available for sale)/(# of units available for sale) ] * # of units sold. Cost of goods available for sale = beg. Wac periodic ending inventory: cogas - cogs.