What does a weight-average method worksheet look like and contain
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What does a weight-average method worksheet look like and contain
There isn't an "official" worksheet. If you're being asked to do one, like in Excel, you'll have to decide for yourself how to set it up. If they want a specific format, then that's a book/class thing, not an accounting thing. If they don't want a specific format, it should not matter what it looks like, as long as the info is there and someone can follow it logically.
Let's look at an example of something you could use weighted average for. You have:
100 units of something at a cost of $36
90 units of that same thing but at a cost of $38
110 units of them at $40
An actual average is adding everything up and dividing by the total. You have a total of 300 units. But it would be tedious adding up $36 100 times, $38 90 times, etc to get all 300 of them. So we take a short cut:
100 x $36 = $3600
90 x $38 = $3420
110 x $40 = $4400
300 total units $11,420 total cost
That's the short-cut way of adding up all 300 items. So now we have a total of $11,420 and can divide by our 300 units to get an average of $38.07.
The reason we call it a weighted average is because the $40 price weights more in the average because there are more of them, and the $38 price weights less because there are less. This came out very close to the middle price of $38, but only because the units I used are so close to each other.
If you need to set up a worksheet, just set up something similar to the above, with your totals and division at the bottom.
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