Question

Describe the simple average method of price relatives. What are its
merits and demerits?(This question is of statistics book)​

Answer 1

Answer:

Merits : 1. It is simple to operate ,as it avoids calculation of issue price after every receipt.

2. This method can usefully be employed in costing continuous processes where each individual order is absorbed into the general cost of producing large quantities of articles.

Demerits: 1. This method cannot be applied industry where each individual job order is to be priced at each stage of its completion.

2. This method is unscientific as it does not take into consideration of quantities purchased at different prices.