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Profits are ₹1,20,000, ₹1,50,000, ₹2,10,000 and ₹2,60,000, with weights 1:2:3:4. What is the weighted average profit?

Answer and explanation

Correct answer: ₹2,09,000

The governing concept is the weighted average, calculated as the sum of each observation multiplied by its weight, divided by the sum of all weights. The products are ₹1,20,000×1 = ₹1,20,000; ₹1,50,000×2 = ₹3,00,000; ₹2,10,000×3 = ₹6,30,000; and ₹2,60,000×4 = ₹10,40,000. Their total is ₹20,90,000. The total weight is 1 + 2 + 3 + 4 = 10. Therefore, weighted average profit = ₹20,90,000 ÷ 10 = ₹2,09,000, so option A is correct. Option B is not an average, option C results from incorrect weighting, and option D reflects an arithmetic error. The largest weight correctly gives the largest profit the greatest influence.

Related tags

GoodwillWeighted AveragePartnership AccountsAccounting CalculationAccountancyPartnership Accounts Basic ConceptsClass 12 Mcq

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