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Profits are ₹50,000, ₹70,000 and ₹90,000, and the corresponding weights are 1:2:3. What is the weighted average profit?

Answer and explanation

Correct answer: Approximately ₹76,667

The governing concept is weighted average profit. Each profit must first be multiplied by its assigned weight, and the resulting weighted total must then be divided by the sum of all weights. The weighted amounts are ₹50,000 × 1 = ₹50,000, ₹70,000 × 2 = ₹1,40,000, and ₹90,000 × 3 = ₹2,70,000. Their total is ₹4,60,000, while the total weight is 1 + 2 + 3 = 6. Thus weighted average profit = ₹4,60,000 ÷ 6 = ₹76,666.67, which is approximately ₹76,667. Hence option A is correct. ₹70,000 is merely the middle profit, ₹90,000 is the largest individual profit, and ₹4,60,000 is the weighted sum before division.

Related tags

GoodwillWeighted AverageAverage ProfitProfit CalculationAccountancyClass 12 McqPartnership Accounts Basic Concepts

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