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Profits are ₹30,000, ₹40,000 and ₹50,000 with weights 1, 2 and 3. What is the weighted average profit?

Answer and explanation

Correct answer: Approximately ₹43,333

A weighted average gives greater importance to the observations carrying larger weights. First calculate the weighted total: (₹30,000 × 1) + (₹40,000 × 2) + (₹50,000 × 3) = ₹30,000 + ₹80,000 + ₹1,50,000 = ₹2,60,000. The total of the weights is 1 + 2 + 3 = 6. Thus, weighted average profit = ₹2,60,000 ÷ 6 = ₹43,333.33, or approximately ₹43,333. Therefore, option A is correct. Option B is only one of the listed profits. Option C is the weighted total before division, and option D does not follow the weighted-average formula. The larger weight assigned to ₹50,000 appropriately raises the average above the ordinary middle value.

Related tags

Weighted AverageProfit CalculationGoodwill ValuationAccountancyGoodwill AccountingReconstitution Admission Of A PartnerClass 12 Mcq

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