I have a list of products with quantity shipped and total net sales for a period of two years. What is the correct way to calculate the average price change for all products?
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║ Item ║ QTY_Y1 ║ NS_Y1 ║ P_Y1 ║ QTY_Y2 ║ NS_Y2 ║ P_Y2 ║ %Chg ║ WT ║
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║ A ║ 978 ║ $28,521 ║ $29.16 ║ 558 ║ $17,145 ║ $30.73 ║ 5% ║ 52.44║
║ B ║ 28 ║ $866 ║ $30.94 ║ 8 ║ $248 ║ $30.94 ║ 0% ║ 0.00║
║ C ║ 8 ║ $115 ║ $14.37 ║ 8 ║ $115 ║ $14.37 ║ 0% ║ 0.00║
║ D ║ 320 ║ $4,667 ║ $14.58 ║ 136 ║ $1,977 ║ $14.54 ║ 0% ║ -0.98║
║ E ║ 6860 ║ $543,312 ║ $79.20 ║ 3600 ║ $285,120 ║ $79.20 ║ 0% ║ 0.00║
║ F ║ 1 ║ $71 ║ $70.56 ║ 2 ║ $147 ║ $73.44 ║ 4% ║ 0.04║
║ G ║ 1920 ║ $190,080 ║ $99.00 ║ 420 ║ $41,580 ║ $99.00 ║ 0% ║ 0.00║
║ H ║ 4 ║ $138 ║ $34.40 ║ 2 ║ $68 ║ $34.20 ║ - 1% ║ -0.02║
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There are multiple ways to do this, but what's correct?
Option 1:
$46.53 = Average price year 1
$47.05 = Average price year 2
(47.05 - 46.53)/46.53 = 1.13%
1% difference in prices from year 1 to year 2
Option 2:
$767,769 = Sum of net sales from year 1
10,119 = Quantity from year 1
$767,769/10,119 = $75.87
$346,400 = Sum of net sales from year 2
4,734 = Quantity from year 2
$346,400/4,734 = $73.17
(73.17-75.87)/75.87 = -3.56%
-3.56% difference in prices from year 1 to year 2
Option 3: 1. Calculate the percent change for each product from one year to the next. (Eg. Product A - (30.73-29.16)/(29.16) = 5%)
Multiply % change by Year 1 Quantity (Eg. Product A - 978 * 5% = 52)
Add up new weighted values (52.44 + 0 + 0 + -.98 + 0 + .04 + 0 + -.02) = 51.48
Divide by sum of quantity from year 1 (51.48/10,119) = .005
.51% difference in prices from year 1 to year 2
Hint -
First find one item price for each item for first year.
Then add them and divide by number of items.
Second thing find one item price for each item for second year.
Then add them and divide by number of items.
Difference between these two averages is your answer.