How to calculate weighted averages in Excel

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

Consider the following example:
A shipment of 10 cases of widgets costs $0.20 per case. Because of heavy consumption of widgets, a second shipment of 40 cases now costs $0.30 per case.
The average cost of the cases in each shipment -- determined by the formula ($0.20+$0.30)/2 = $0.25 -- is not an accurate measure of the average cost of the cases because it does not take into account that there are 30 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 in these two shipments.
More information
To find a weighted average, follow these steps:
  1. In a new worksheet, type the following data:
       A1:  Cost     B1:  Cases   A2:  $.20     B2:  10   A3:  $.30     B3:  40					
  2. Type the formula below in any blank cell (it is not necessary to type this formula as an array):


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Article ID: 214049 - Last Review: 09/23/2015 06:43:00 - Revision: 9.0

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