Moving weighted average & All-month average

I. Basic Principles

1. weighted average method. It is also called once every month. this means to calculate the weighted average unit cost of inventory by removing the total purchase cost of the current month and the inventory cost at the beginning of this month, this is a method to calculate the inventory cost for this month and the inventory cost at the end of the period.
Computing:
Inventory Unit cost = {actual inventory cost at the beginning of the month + Σ (actual unit cost of each batch of purchases this month * quantity of each batch of purchases this month )} /(inventory quantity at the beginning of the month + total quantity of each batch purchased in the month)
Cost of inventory issued this month = Quantity of inventories issued this month * Inventory Unit Cost
Inventory cost at the end of the month = Quantity of inventory at the end of the month * inventory unit cost or = actual cost of inventory at the beginning of the month + actual cost of inventory at the current month-actual cost of inventory issued this month

2. Moving weighted average method. Also known as the moving weighted average method, it refers to the cost of each purchase plus the cost of the original inventory, divided by the quantity of each purchase plus the quantity of the original inventory, it is used to calculate the weighted average unit cost, this method is used to calculate the inventory cost before the next purchase.
Calculation formula:
Inventory Unit cost = (actual cost of the original inventory + actual cost of the current purchase)/(original inventory + current inventory)
Cost of inventory issued this time = number of inventories issued this time * unit cost of inventory before this shipment
Inventory cost at the end of the current month = Quantity of inventory at the end of the month * unit cost of inventory at the end of the month

The weighted average method is used to multiply each value by the corresponding number of units. Then, the sum is added to obtain the overall value, and then divided by the total number of units.

X "= (x1y1 + x2y2 + x3y3 ...... + Xnyn)/(y1 + y2 + ...... + Yn)

The moving average method is to calculate the average according to a certain number of items from the first item, moving one item by one, and moving the edge on average.

I. weighted average method (weighted average method once a month) means to remove all goods received this month and inventory at the beginning of the month as the weight, plus the inventory cost at the beginning of the month, calculate the weighted average unit cost of inventory to determine inventory issuance and inventory cost.
The calculation formula is as follows:
1. inventory Unit cost = {deposit amount at the beginning of the month + sigma (actual unit cost of each batch of goods received this month + quantity of each batch of goods received this month )} /(number of goods received in each batch at the beginning of the month + total number of goods received in each batch this month)
2. Inventory Cost issued this month = inventory volume issued this month * Inventory Unit Cost
3. inventory cost at the end of the month = inventory quantity at the end of the month * inventory unit cost.
The weighted average unit price is calculated only once at the end of the month using the weighted average method. Therefore, it is relatively simple. in addition, when the market price increases or falls, the unit cost is averaged, and the inventory cost is apportioned in a compromise. however, the disadvantage is that it is usually impossible to provide the unit price and amount of inventory from the account, which is not conducive to strengthening the management of inventory.

Ii. moving average method refers to the cost of the current receipt plus the cost of the original inventory, divided by the current inventory Quantity Plus the original inventory quantity, and the weighted average unit price is calculated, A Method for Calculating the inventory. the calculation formula is as follows:
Inventory weighted unit price = (original inventory unit price + actual cost of goods received in this batch)/(original inventory quantity + current receipt quantity) current batch shipping cost = current batch shipping quantity * inventory weighted unit price
Its advantage is that it enables managers to know inventory settlement information in a timely manner, and the average unit cost calculated as well as the inventory cost for issuance and settlement are objective. however, using this method, the average unit price is calculated every time the goods are received, and the calculation workload is large, which is not applicable to enterprises with frequent delivery. 
Is the most widely used cost accounting method in practical work.

Average weighting: for example, the first five days of the purchase price is one yuan, and the next five days of the purchase price is two yuan; ten days is a total of fifteen yuan, and the average weighting is one and a half yuan; so let's think about your problem!

The moving weighted average price is the average price of several purchases of the same type of items. For example, 20 purchases of the same item on the first day, totaling 240 yuan; 60 purchases on the sixth day, A total of 600 yuan, then the weighted average price = 240 + 600/20 + 60 = 10.5, and so on

The moving average encryption method is to calculate the price when similar items are sent, and the price when the items are sent is different. for example, if you purchase materials for the first day of 100, a total of 200 yuan, and a total of 300 yuan for the second day, you must calculate the price when you send materials for the fourth day of 600, at this time, we need to calculate the weight,
(200 + 600)/(100 + 400) = 1.6 RMB/kg
In this way, as long as there are materials to be sent, it is called the mobile weighting method. As the above friend said, it is a weighted average method.

 

Ii. Advantages and Disadvantages and Applicability

1. From the two definitions, we can see that the weighted average is also a kind of moving average, that is, the frequency is different;
2. The price settlement time is different. The weighted average can only be reached at the end of the month, and the moving average is always there;

3. the moving average method can enable the enterprise management authorities to know inventory settlement in a timely manner, and calculate the average unit cost and the inventory cost for issuance and settlement;

4. The moving weighted average calculation is performed when necessary, such as the sales time and the stock fund usage time;

5. It takes a lot of effort to manage the mobile average enterprise. It makes no sense to enter notes for documents.
We can see from the above two points that the two methods have different sensitivity to prices.
The mobile average is suitable for enterprises with relatively high price fluctuations, such as industries related to raw materials.
Weighted average applies to enterprises with relatively low price fluctuations, such as the mechanical processing industry.

 

Iii. Principles of other cost methods

(1) first-in-first-out method
(1) The first-in-first-out method is to issue inventory first, and then determine the cost of inventory issuance and ending inventory accordingly.
(2) the results calculated based on the on-site inventory system are the same as those of the perpetual inventory system.
(3) In the first-in-first-out method, the inventory cost is determined by the latest purchase, and the inventory cost at the end of the period is close to the current market price.
(4) when prices rise, the first-in-first-out method will overestimate the enterprise's current profit and inventory value; otherwise, when prices fall, the enterprise's inventory value and current profit will be underestimated.
(5) the advantage of the first-in-first-out method is that enterprises cannot select inventory pricing at will to adjust the current profit; the disadvantage is that the workload is relatively large.
(2) Post-in, first-out
(1) The post-import, first-out method is to issue the inventory purchased after comparison, so as to determine the cost of the inventory issue and the final inventory.
(2) the results calculated based on the field inventory system are different from those calculated based on the perpetual inventory system.
(3) the advantage of the backward-forward, FIFO method is that during the period of rising prices, the inventory issued in the current period is calculated based on the unit cost of the recent receipt, so that the current cost increases and the profit decreases, it can reduce the adverse effects of inflation on enterprises, which is also one of the methods to implement the robust principle in accounting practice. The disadvantage is that the calculation is cumbersome.
(3) Individual valuation methods
Individual valuation method, also known as individual identification method, specific identification method, batch actual method. This method is used to assume that the physical circulation of the inventory is consistent with the cost flow. Based on the inventory, the purchase batches of the inventory and the final inventory are identified one by one, the unit cost determined at the time of purchase or production is used as the method for calculating the inventory issued by each batch and the final inventory respectively.
(4) weighted average method
The weighted average method is also called the one-time weighted average method for the whole month. This method uses the total number of goods received this month plus the number of inventories at the beginning of the month as the weight to remove all goods received this month and the inventory cost at the beginning of the month, calculate the weighted average unit cost of inventory to determine inventory issuance and inventory cost.
(5) moving average method
The moving average method, also known as the moving weighted average method, refers to the cost of the current receipt plus the cost of the original inventory, divided by the current receipt Quantity Plus the original receipt quantity, it is calculated by the weighted unit price, it is also a method for calculating the issued inventory.
(6) planned cost method
The planned cost method means that the company's inventory income, issuance and balance are all calculated based on the pre-defined planned cost, and a separate "material cost difference" subject is set up to register the difference between the actual cost and the planned cost.