Table of Contents
Sumproduct & Weighted Averages Explained
Functionality
This function computes the total of the products from corresponding arrays or ranges.
Formula Structure
=SUMPRODUCT(array1, [array2], [array3]…)
Explanation
=SUMPRODUCT(this array, multiplied by that array…)
Utilizing the SUMPRODUCT function provides a swift method to compute the weighted average of two data sets. A weighted average is useful for calculating the average salary of staff, the average score on a test, or the average selling price of a company's inventory, as demonstrated below.
Download the Excel workbook: Sumproduct_Easy.xlsx
To ascertain the average selling price of our entire stock, the SUMPRODUCT function proves invaluable. It helps in calculating the total value of the stock items, which we then divide by the total quantity of units to derive the average selling price.
STEP 1: Input the SUMPRODUCT function into an empty cell:=SUMPRODUCT(
STEP 2: Define the SUMPRODUCT parameters:
First Array
What constitutes the initial data array?
To calculate the units sold, select these figures.=SUMPRODUCT(C14:C17,
Second Array
What constitutes the subsequent data array?
To calculate the selling prices, select these figures. These will be multiplied by the first array we selected.=SUMPRODUCT(C14:C17, D14:D17)
STEP 3: With the total value now calculated, we can find the average value by dividing it by the total number of units.=SUMPRODUCT(C14:C17, D14:D17) / SUM(C14:C17)
By employing this straightforward formula, we efficiently calculate the average selling price without requiring additional helper columns!
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