Under the weighted average cost formula, the cost of each item is determined from the eighted average of the cost of similar items at the beginning of the period and the cost of similar items purchased or produced during the period. The average may be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances of the entity.
Weighted average cost formula is specifically discussed in IAS 2.
Source: Glossary of Terms of IFRSs issued as at 31 December 2008.
