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Costing .
Commercial tonne is illegal as per tax laws. It is used for tax evasion as the weighted average allocation of costs increases expenses.
commercial method one should be made redundant
On the whole this method is wrong, I’ll explain
absolute method = distance * weighted average weight
commercial method= distance *average weight
both are wrong,
the absolute formula= distance*weight
the first formula above reduces costs more than what they incurred
the second formula above increase since costs than what they incurred
the third formula above is giving the exact cost incurred
it took me 15 minutes to find out the formulas differ. What is the formula that you have
https://icmai.in/upload/Students/PTP2012_Dec14/Inter/Set1/Paper10-Solution.pdf
In the link above, weighted average is wrongly printed maybe.
first one is third formula
second method the second formula
Please write the formulas here. Txs
Ok Mr. Sasi, that is the right way you got. Weighted average reduces and simple average value but accurate. That weighted average method is used in inventory and capitalising borrowing costs.
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