Weighted average always works the same way, regardless of the subject matter. It's actually a short-cut way to doing a regular old average. If you had one thing at $15 and one thing at $18, you could add $15 + $18 and divide by 2. But in this case you cannot just average $3, $3.20, and $3.30, because you don't just have one of each. You have a LOT of each. And you have to count every single one of them. (Do you want to list $3.00 320 times to include in your average? Probably not.)
So instead, you multiply the value times how many you have, to get a total value. Add up all those total values and divide by how many you have.
For instance:
100 @ $10 = $1000
120 @ $11 = $1320
So you have total dollar value of $2320 and total units of 220. So $2320/220 = $10.55 average. i.e. you've averaged all 220 of the units, not just $10 & $11. (For something like this, you may not want to round you answer to cents, but take it out 3 or 4 decimal places.)
It's actually the same way you do a grade point average, except instead of a dollar value, you have a point value for the grade. (Assuming a 4-point scale.)
P.S. This really oughta be over under the acct/finance homework help section. |