ECONOMICS

Detailed explanation-1: -A simple average advantage is its simplicity to calculate and understand. A weighted average is used due to its unbiasedness towards middle value and assigned average value where most of the observations lie within. Further, it is unaffected by outliners or extreme values. The simple average is affected by outliers.

Detailed explanation-2: -A weighted average is sometimes more accurate than a simple average. In a weighted average, each data point value is multiplied by the assigned weight, which is then summed and divided by the number of data points. For this reason, a weighted average can improve the data’s accuracy.

Detailed explanation-3: -The major benefit of the weighted average method is simplicity. The major disadvantage is that accuracy and performance measurements are impaired. The three methods of allocating support department costs to producing departments are the direct, weighted average, and reciprocal methods.

Detailed explanation-4: -A key advantage of WACC is that it takes the company’s capital structure into consideration. If a company primarily uses debt financing, for instance, then its WACC will be closer to its cost of debt than its cost of equity.

Detailed explanation-5: -Advantages Of Simple Average Method i) This method is easy to operate. ii) It gives reasonably accurate results if prices are stable. iii) Simple average method reduces clerical work.