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Profits are ₹60000, ₹80000 and ₹90000, and weights are 1:2:4. What is the approximate weighted average profit?

Answer and explanation

Correct answer: ₹82857

Weighted average profit gives greater importance to the profits assigned higher weights. Multiply each profit by its weight: ₹60,000×1 = ₹60,000, ₹80,000×2 = ₹1,60,000, and ₹90,000×4 = ₹3,60,000. The weighted total is ₹5,80,000 and the total weight is 1+2+4 = 7. Therefore, weighted average profit = ₹5,80,000 ÷ 7 = approximately ₹82,857. Option A is correct. Option B uses an incorrect weighting calculation, option C simply selects the highest profit, and option D is only the weighted total, not the average because it has not been divided by total weights.

Related tags

GoodwillWeighted AverageProfit CalculationPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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