Calculating Weighted Averages

A weighted average differs from an average in that a weighted average returns a number that depends both on its value and its weight.

Consider the following example: The average cost of the cases in each shipment, ($0.20+$0.30)/2 = $0.25, would not be an accurate measure of the average cost of the cases, since it does not take into account that there are thirty more cases being purchased at $0.30 than at $0.20. The weighted average would return $0.28, a more accurate representation of the average cost of a case of widgets.

To find a weighted average, follow these steps:

1. In a new worksheet, enter the following data:

         A1:  Cost     B1:  Cases
         A2:  $.20     B2:  10
         A3:  $.30     B3:  40
   							

2. Follow the appropriate procedure below for your version of Microsoft Excel:

   Microsoft Excel Versions 4.0 and Later

   Enter the formula below in any blank cell. It is not necessary to enter this formula as an array.
   =SUMPRODUCT(A2:A3,B2:B3)/SUM(B2:B3)

   Microsoft Excel Versions 2.x and 3.0

   Enter the formula below as an array in any blank cell.
   =SUM(A2:A3*B2:B3)/SUM(B2:B3)

NOTE: The above formula must be entered as an array formula. To enter a formula as an array formula in Microsoft Excel for Windows or Microsoft Excel for OS/2, press CTRL+SHIFT+ENTER. In Microsoft Excel for the Macintosh, press COMMAND+ENTER.

"Function Reference," version 4.0, page 424

"User's Guide 1," version 4.0, pages 153-166

"User's Guide," version 3.0 for Windows, pages 275-289

"User's Guide," version 3.0 for the Macintosh, pages 268-281