Weighted Average Method of Process Costing

The weighted average method of process costing calculates equivalent units and production costs differently from the FIFO method of process costing. In the weighted average method, the equivalent units are the units transferred out plus the equivalent units of the ending work in process. Production costs to be accounted for are the cost of beginning work in process plus costs added during the month. Cost per equivalent units is the production cost divided by the equivalent units. Normally, a separate cost per equivalent units is calculated for direct materials and conversion costs (labor and overhead). See also FIFO method of process costing.