The weighted average method is used to assign the average cost of production to a product. Weighted average costing is commonly used in situations where:
Inventory items are so intermingled that it is impossible to assign a specific cost to an individual unit.The accounting system is not sufficiently sophisticated to track FIFO or LIFO inventory layers.Inventory items are so commoditized (i.e., identical to each other) that there is no way to assign a cost to an individual unit.
