hi @debesht
Perhaps. I find it interesting that retailers like Dmart , Future Retail etc follow the weighted average cost method because goods are non standard and are not homogeneous. Maybe because of the sheer volume, its more easy to use this method but i am not sure it accurately represents gross margins.
Amongst other things, for e.g during Dussera/Diwali etc a lot of apparels may be sold so the ideal situation would be to account for the cost of those apparels sold however the weighted average cost makes no distinction between these things and averages out all the cost over all items. So unless, the distribution of items sold closely matches the distribution of items taken in the cost of goods sold the gross margins may be distorted especially in the period around the festive season where shopping habits are materially different.
Maybe i am trying to fit an explanation to the gross margin reduction and that is certainly possible. However, the standard definition of weighted cost of inventory doesnt seem to be well suited to retail where the timing & price of goods sold is vastly different from the timing & cost of their purchase esp for non perishable items.
Best
Bheeshma