CA Inter P4 · Chapter 2 · Question 6 of 12
Using the same data (opening stock 400 kg at ₹30, purchase 600 kg at ₹33, issue of 700 kg after the purchase), what is the value of closing stock under the weighted average method?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) ₹9,540
Explanation
Weighted average rate = (₹12,000 + ₹19,800) / (400 + 600) kg = ₹31,800 / 1,000 = ₹31.80 per kg. Closing stock = 1,000 - 700 = 300 kg x ₹31.80 = ₹9,540. Using a simple average of the two rates (₹31.50) ignores the quantities and is incorrect.
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