Section 451.262 - Weighted average

451.262 Weighted average. A simple average of items reduced to a common basis. For example, purchases of certain raw material are made during a given month as follows:

Units Price each Total cost

150 $1.50 $225.00

175 1.40 245.00

50 1.32 66.00

65 1.30 84.50

___ _____ _______

440 $5.52 $620.50

The simple average of prices paid is $5.52 / 4, or $1.38; but the weighted average would be the total cost divided by the number of units purchased: $620.50 / 440, or $1.41.
 

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