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weighted average method (of process costing) |
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Definition of weighted average method (of process costing)weighted average method (of process costing)the method of cost assignment that computes an average cost per
Related Terms:Arithmetic average (mean) rate of returnArithmetic mean return. AverageAn arithmetic mean of selected stocks intended to represent the behavior of the market or some Average accounting returnThe average project earnings after taxes and depreciation divided by the average Average age of accounts receivableThe weighted-average age of all of the firm's outstanding invoices. Average collection period, or days' receivablesThe ratio of accounts receivables to sales, or the total Average cost of capitalA firm's required payout to the bondholders and to the stockholders expressed as a Average lifeAlso referred to as the weighted-average life (WAL). The average number of years that each Average maturityThe average time to maturity of securities held by a mutual fund. Changes in interest rates Average (across-day) measuresAn estimation of price that uses the average or representative price of a Average rate of return (ARR)The ratio of the average cash inflow to the amount invested. Average tax rateTaxes as a fraction of income; total taxes divided by total taxable income. Capitalization methodA method of constructing a replicating portfolio in which the manager purchases a Corporate processing floatThe time that elapses between receipt of payment from a customer and the Current rate methodUnder this currency translation method, all foreign currency balance-sheet and income Diffusion processA conception of the way a stock's price changes that assumes that the price takes on all Direct estimate methodA method of cash budgeting based on detailed estimates of cash receipts and cash Dollar-weighted rate of returnAlso called the internal rate of return, the interest rate that will make the Dow Jones industrial averageThis is the best known U.S.index of stocks. It contains 30 stocks that trade on Flow-through methodThe practice of reporting to shareholders using straight-line depreciation and In-house processing floatRefers to the time it takes the receiver of a check to process the payment and Log-linear least-squares methodA statistical technique for fitting a curve to a set of data points. One of the Market value-weighted indexAn index of a group of securities computed by calculating a weighted average Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Moving averageUsed in charts and technical analysis, the average of security or commodity prices Normalizing methodThe practice of making a charge in the income account equivalent to the tax savings Price discovery processThe process of determining the prices of the assets in the marketplace through the Purchase methodAccounting for an acquisition using market value for the consolidation of the two entities' Residual methodA method of allocating the purchase price for the acquisition of another firm among the Simple compound growth methodA method of calculating the growth rate by relating the terminal value to Simple moving averageThe mean, calculated at any time over a past period of fixed length. Statement-of-cash-flows methodA method of cash budgeting that is organized along the lines of the statement of cash flows. Temporal methodUnder this currency translation method, the choice of exchange rate depends on the Time-weighted rate of returnRelated: Geometric mean return. Weighted average cost of capitalExpected return on a portfolio of all the firm's securities. Used as a hurdle Weighted average couponThe weighted average of the gross interest rate of the mortgages underlying the Weighted average lifeSee:average life. Weighted average maturityThe WAM of a MBS is the weighted average of the remaining terms to maturity Weighted average remaining maturityThe average remaining term of the mortgages underlying a MBS. Weighted average portfolio yieldThe weighted average of the yield of all the bonds in a portfolio. WEIGHTED AVERAGEAn inventory valuation method that calculates a weighted average cost per unit for all the goods available for sale. Absorption costingA method of costing in which all fixed and variable production costs are charged to products or services using an allocation base. Activity-based costingA method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers. Job costingA method of accounting that accumulates the costs of a product/service that is produced either Lifecycle costingAn approach to costing that estimates and accumulates the costs of a product/service over Process costingA method of costing for continuous manufacture in which costs for an accounting compared are compared with production for the same period to determine a cost per unit produced. Target costingA method of costing that is concerned with managing whole-of-life costs of a product/service during the product design phase – the difference between target price (to achieve market share) and the target profit margin. Variable costingA method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs. Weighted average cost of capitalSee cost of capital. Allowance methodA method of adjusting accounts receivable to the amount that is expected to be collected based on company experience. Direct methodA method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows. Direct write-off methodA method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers. Indirect methodA method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities. Weighted averageA method of accounting for inventory. activity based costing (ABC)A relatively new method advocated for the weighted-average cost of capitalweighted means that the proportions of Average Collection Periodaverage number of days necessary to receive cash for the sale of Weighted Average Cost of Capital (WACC)The weighted average of the costs of the capital components absorption costinga cost accumulation and reporting activity-based costing (ABC)a process using multiple cost drivers to predict and allocate costs to products and services; algebraic methoda process of service department cost allocation attribute-based costing (ABC II)an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute backflush costinga streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires business process reengineering (BPR)the process of combining information technology to create new and more effective cost-benefit analysis the analytical process of comparing therelative costs and benefits that result from a specific course direct costingsee variable costing direct methoda service department cost allocation approach dividend growth methoda method of computing the cost FIFO method (of process costing)the method of cost assignment that computes an average cost per equivalent full costingsee absorption costing high-low methoda technique used to determine the fixed hybrid costing systema costing system combining characteristics job order costing systema system of product costing used joint processa manufacturing process that simultaneously judgmental method (of risk adjustment)an informal method of adjusting for risk that allows the decision maker life cycle costingthe accumulation of costs for activities that method of least squaressee least squares regression analysis method of neglecta method of treating spoiled units in the modified FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per multiprocess handlingthe ability of a worker to monitor net present value methoda process that uses the discounted process benchmarkingbenchmarking that focuses on practices and how the best-in-class companies achieved their results process complexityan assessment about the number of processes through which a product flows process costing systema method of accumulating and assigning costs to units of production in companies producing large quantities of homogeneous products; processing timethe actual time consumed performing the process mapa flowchart or diagram indicating every step process productivitythe total units produced during a period process quality yieldthe proportion of good units that resulted from the activities expended product- (or process-) level costa cost that is caused by the development, production, or acquisition of specific products or services relevant costinga process that compares, to the extent possible risk-adjusted discount rate methoda formal method of adjusting for risk in which the decision maker increases the rate used for discounting the future cash flows to compensate for increased risk simplex methodan iterative (sequential) algorithm used to solve multivariable, multiconstraint linear programming problems six-sigma methoda high-performance, data-driven approach to analyzing and solving the root causes of business problems statistical process control (SPC)the use of control techniques that are based on the theory that a process has natural variations in it over time, but uncommon variations step methoda process of service department cost allocation strict FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per equivalent unit and, in transferring units from a department, keeps the target costinga method of determining what the cost of a variable costinga cost accumulation and reporting method weighted average cost of capitala composite of the cost of the various sources of funds that comprise a firm’s capital structure; the minimum rate of return that must be earned on new investments so as not to dilute shareholder value Bootstrapping, bootstrap methodAn arithmetic method for backing an
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