I am trying to figure out the proper way to get an average and have two methods that are yielding two different results. I am trying to figure out my average cost per item. Lets say I have 3 items:
Item 1: 10 pcs/\$10000 or \$1000 each
Item 2: 5 pcs/\$4000 or \$800 each
Item 3: 2 pcs/\$1000 or \$500 each.
Would I add the totals and divide by the total pieces (\$15000/17 = \$882 each) or add \$1000+\$800+\$500 and divide by 3 = \$766 each? Is one a center weighted average and the other a true average? Which is which? I thought the outcomes would be the same for some reason.