What is the purpose of finding an average: What is the average? | TheSchoolRun

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Average vs Weighted Average | Top 4 Differences (with Infographics)

Average and weighted average are two different terms in Excel. Average is a method to calculate the central point of a given data set. The traditional way of calculating an average of adding the numbers divided by the number of data sets is estimated. In contrast, a weighted average is calculated similarly but with a weight multiplied by each data set.

For example, a company owner purchases 40,000 units of a product at $5 each and 20,000 at $7 each. We will use these units as the weight and the total number of units as the sum of all weights to calculate the weighted average. So, we will get,

=$5(40,000) +$7(20,000)/40,000+20,000

= ($200,000+$140,000)/60,000

= $160,000/60,000

=$5.66

So, the average weighted cost is $5.66 per unit.

With the same example, if we can calculate an average. It can be calculated by adding all of them and dividing the same by several observations.

Table of contents
  • Difference Between Average vs Weighted Average
    • What is Average?
    • Example of Average
    • What is the Weighted Average?
    • Example of Weighted Average
    • Average vs Weighted Average Infographics
    • Average vs Weighted Average – Key Differences
    • Average vs. Weighted Average Head-to-Head Differences
    • Conclusion
    • Recommended Articles

The average and weighted average are mathematical and statistical terms in finance and business. But both are calculated differently. The average is the sum of all individual observations divided by the number of observations. Average is used to find the middle value in a particular data set. It is also known as a central tendency. It is used to find the central tendencyCentral TendencyCentral Tendency is a statistical measure that displays the centre point of the entire Data Distribution & you can find it using 3 different measures, i.e., Mean, Median, & Mode. read more of a group of data in a specific group of data. The weighted average is used in the field of accounting. The primary purpose is to find the right weight or value to solve. For example, the weighted average is the value of the principal repayment of certain bonds or loans until the principal value is paid.

What is Average?

The average is the sum of all individual observations divided by the number of observations. It is used to find the middle value in a particular data set. It is also known as a central tendency. It is used to find the central tendency of a group of data in a specific group of data. It is mainly used for the representation of data. We can solve it for a data set by using the arithmetic formula.

Average formula = Sum of Observation / Number of Observation

Example of Average

Let us see an example to understand the average.

Suppose ten students in class score 50, 60, 70, 80, 65, 78, 95, 63, 58, 91, respectively, out of 100. Now, let us find the average for the above marks of a student.

Average formula  = Sum of Observation / Number of Observation

Sum of Observation = 50 + 60 + 70 + 80 + 65 + 78 + 95 + 63 + 58 + 91

So, the average of the class of 10 students is 71.