Weighted average method (process costing)

Weighted average method (process costing) pools opening work-in-progress cost with the current period's cost and spreads the total over all equivalent units, unlike FIFO, which keeps the two layers separate.

ByHoang TruongUpdated July 11, 2026

See it move

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A department carries €2,000 of opening materials cost, adds €18,000 this period, over 5,000 equivalent units, giving €4.00 per unit. Weighted average pools the opening cost straight in; FIFO instead keeps the €2,000 layer separate and costs only the units started and finished this period at the new rate, preserving that period's own cost change.

Where it fits

SubjectCost AccountingCoreTopicJob & Process CostingCore

The formula

LaTeX

EU = U_c + (W \times p)

Variables

$E U$: Equivalent units (units)
$U_{c}$: Units completed and transferred out (units)
$W$: Closing work-in-progress units (units)
$p$: Percentage complete for that cost element (%)

Gives the equivalent units of production for a cost element under the weighted average method, blending opening WIP with the current period rather than tracking it separately.

LaTeX

c = \frac{B + A}{EU}

Variables

$c$: Cost per equivalent unit (€)
$B$: Opening WIP cost brought forward (€)
$A$: Costs added this period (€)
$E U$: Equivalent units (units)

Pools the cost brought forward in opening WIP with the current period's cost before dividing by equivalent units — the step that defines the weighted average method.

Check yourself

PracticeCORE

A process department uses the weighted average method. Opening work-in-progress is 800 units, carrying forward €1,800 of conversion cost. During the month, 7,200 units are started, 7,000 units are completed and transferred out, and closing WIP is 1,000 units, 20% complete for conversion. Conversion costs added during the month total €21,600. What is the cost per equivalent unit for conversion?

Select an answer to check your understanding.