Question

Which of the following is a disadvantage of the weighted average costing method?

a.It does not consider units in beginning work in process while computing equivalent units of output.
b.It increases the material costs of a firm significantly.
c.It can be used only by manufacturing firms.
d.It combines the performance of the current period with that of a prior period.

Answer 1

The weighted average costing method's disadvantage is that it blends the performance of different periods, which can obscure the true cost per unit when costs vary between those periods.

Step-by-step explanation:

The disadvantage of the weighted average costing method is that it combines the performance of the current period with that of a prior period. This averaging process may not provide the most accurate cost per unit if the costs of materials and labor change significantly between periods. In contrast, the first-in, first-out (FIFO) method might offer a clearer picture in such scenarios by keeping costs from different periods separate. The weighted average costing method doesn't inherently increase material costs, nor is it exclusively used by manufacturing firms, and it does consider units in beginning work in process while computing equivalent units of output.