1

LAGUNA UNIVERSITY
College of Entrepreneurship, Management and Accountancy
Bachelor of Science in Accountancy

BCOMP 3
STATISTICAL ANALYSIS WITH SOFTWARE APPLICATION

MODULE 4
LESSON 5
MEASURES OF CENTRAL TENDENCY

I. Learning outcomes:

At the end of the lesson, students should be able to:

1. Differentiate grouped from ungrouped data.
2. Define mean, median, and mode
3. Calculate the mean, median, and mode for ungrouped data.
4. Calculate the mean, meadian, and mode for grouped data.
5. Apply the weighted arithmetic mean in a distribution with weighted
scores.
6. Give the advantages of using mean, median, or mode as a measure of
central tendency.
7. Identify the most appropriate measure of central tendency in a certain
distribution.
8. Determine the quartile, decile, and percentile values in a distribution.

I. Introduction

Once the data have been organized and presented in tables and graphs,
the researcher must be able to describe in terms of a single value. This value,
which gives a summary of the characteristics of a given set of data is called
Measures of Central Tendency. We shall consider in this lesson, the three most
important measures of central tendency: the mean, the median and the mode.

II. Content and Discussion

 2

Definition:

A measure of central tendency is a single value that attempts to describe a

set of data by identifying the central position within that set of data. As such,
measures of central tendency are sometimes called measures of central location.
They are also classed as summary statistics. The mean (often called the average)
is most likely the measure of central tendency that you are most familiar with,
but there are others, such as, the median and the mode

The "mean" is the "average" you're used to, where you add up all the
numbers and then divide by the number of numbers. The "median" is the "middle"
value in the list of numbers. ... If no number in the list is repeated, then there is
no mode for the list.

What is Summation Notation?

 3

In Statistics, it is necessary to work with sums of numerical values, and to express these, we
make use of standard notation.

Summation (Σ) just means to “add up.” For example, let’s say you had 5 items in a data set:
1,2,5,7,9; you can think of these as x-values. If you were asked to add all of the items up in
summation notation, you would see:
Σ(x) which equals 1 + 2 + 5 + 7 + 9 = 24.

When using summation notation, X1 means “the first x-value”, X2 means “the second x-
value” and so on. For example, let’s say you had a list of weights: 100lb, 150lb, 153lb and
202lb. The weights and their corresponding x-values are:
X1: 100lb
X2: 150lb
X3: 153lb
X4: 202lb

The “i=1” at the base of Σ means “start at your first x-value”. This would be X1 (100lb in this
example). The “n” at the top of Σ means “end at n”. In statistics, n is the number of items in
the data set. So what this summation is asking you to do is “add up all of your x-values
from the first to the last.” For this set of data, that would be:
100 lb + 150 lb + 153 lb + 202 lb = 605 lb.
Note: If you see a number above Σ, instead of n, it means to add up to a certain point. For
example, a “3” above the Σ means to sum up the the third item (X 3) in the set.
Why the difficult notation? Why not just say “add up”? There are cases when you might
want to start at a different point in the data set. Although you probably won’t come across
these in an elementary statistics class, if you go onto more advanced stats (or calculus),
you’ll come across many different variations. So introducing the Σ notation is getting you
used to the format, much like x and y is introduced very early on in basic math.

Summation notation is also a shorthand that helps to avoid long equations. For example,
take this lengthy expression, where a, b, and c are constants, and X And Y are random
variables.
(aX1+bY1+c)+(aX2+bY2+c)+(aX3+bY3+c)+(aX4+bY4+c)+(aX5+bY5+c)+(aX5+bY5+c)
This can be written more succinctly in summation notation as:

A More Complicated Example

One of the most challenging formulas you’ll come across in elementary statistics that
involves summation notation is Pearson’s correlation coefficient:
 4

The Pearson correlation coefficient

There are multiple summations in the formula and although it’s time consuming to solve, it
is fairly straightforward if you break it down into steps. Note that there are two
summations of X in the formula:
ΣX2, which means to square the x-values and add them all up
and
(ΣX)2, which means to add up all of the x-values and then square.

https://www.statisticshowto.com/summation/#:~:text=Summation%20(%CE%A3)%20just%20means
%20to,%2B%207%20%2B%209%20%3D%2024.
https://www.youtube.com/watch?v=1naiWCWfSt4
https://www.youtube.com/watch?v=8i9-9zHbW6g
CENTRAL TENDENCY FOR UNGROUPED DATA

Mean
The most commonly used measure of central tendency is the arithmetic mean. It is
called the mean or the computed average.
It is defined to be the sum of the values of a group of items divided by the number of
such items.

Display of the relationship of

the sample mean from the population mean of a data set
 5

Characteristics of the Mean

The mean is a reliable or a more stable measurement to use when a sample data are
being used to make inferences about populations. It is the point in which balances all the
values on either side. The mean is sensitive or is greatly affected by the values, high or low
and this makes it an inappropriate average to use when the distribution is highly skewed. It
loses its representative quality. The mean cannot be computed when the distribution
contains open-minded intervals in the balance of additional information.

Uses of the Mean

The mean is the most commonly used easily understood, easily calculated and
generally recognized average. It is the best measure to use when the distribution is
symmetrical. It is useful measure for inferential statistics. It is also used to obtain an
average value of a series of values after each item is weighted. It is referred to as weighted
average.

Computation of the Mean for Ungrouped Data

 6

Let us look into some example problems to understand the above concept.

Question 1 :
The marks obtained by 10 students in a test are 15, 75, 33, 67, 76, 54, 39, 12, 78, 11. Find
the arithmetic mean.

Solution :
Mean =  Total marks of 10 students / 10
  =  (15 + 75 + 33 + 67 + 76 + 54 + 39 + 12 + 78 + 11) / 10
  =  460 / 10
=  46

Question 2 :
Find the mean of 2, 4, 6, 8, 10 , 12, 14, 16.
Solution :
Mean =  Sum of given numbers / 8
  =  (2 + 4 + 6 + 8 + 10 + 12 + 14 + 16) / 8
 =  72 / 8
=  9

Question 3 :
John studies for 4 hours, 5 hours and 3 hours respectively on three consecutive days. How
many hours does he study daily on an average?
Solution :
The average study time of John  
=  Total number of study hours / Number of days for which he studied
  =  (4 + 5 + 3) / 3
  =  12 / 3
=  4 hours
Thus, we can say that John studies for 4 hours daily on an average.

Question 4 :
A batsman scored the following number of runs in six innings:
 7

36, 35, 50, 46, 60, 55

Calculate the mean runs scored by him in an inning.
Solution :
To find the mean, we find the sum of all the observations and divide it by the number of
observations.
Mean  =  Total runs / Number of innings
  =  (36 + 35 + 50 + 46 + 60 + 55) / 6
  =  47
Thus, the mean runs scored in an inning are 47.

Question 5 :
The ages in years of 10 teachers of a school are:
32, 41, 28, 54, 35, 26, 23, 33, 38, 40
What is the mean age of these teachers?
Solution :
Mean age of the teachers
  =  Sum of age of teachers / Number of teachers
  =  (23 + 26 + 28 + 32 + 33 + 35 + 38 + 40 + 41 + 54) /10
  =  350 / 10
  =  35 years

Question 6 :
Following table shows the points of each player scored in four games:
Player Game 1 Game 2 Game 3 Game 4
A 14 16 10 10
B 0 8 6 4
C 8 11 Did not play 13

Now answer the following questions:

(i) Find the mean to determine A’s average number of points scored per game.
(ii) To find the mean number of points per game for C, would you divide the total points by
3 or by 4? Why?
(iii) B played in all the four games. How would you find the mean?
(iv) Who is the best performer?

Solution :
(i)  Mean score of A  =  (14 + 16 + 10 + 10) / 4
  =  12.5
Mean score of A per game is 12.5

(ii)  To find the mean number of points per game for C, we have to divide the total points by
3.
Because he didn't participate in game 3. Total number of games he played is 3.

(iii)  Mean score of B  =  (0 + 8 + 6 + 4) / 4

  =  18/4
=  4.5
Mean score of B per game is 4.5

(iv) To choose the best performer, we have to find the mean score of each player.
Mean score of C  =  (8 + 11 + 13) / 3
  =  32/3
  =  10.6
Mean score of A per game is 12. Mean score of B per game is 4.5 Mean score of C per game
is 10.6
Hence C is the best performer.
 8

Weighted Mean

A weighted mean is a kind of average. Instead of each data point contributing

equally to the final mean, some data points contribute more “weight” than others. If all the
weights are equal, then the weighted mean equals the arithmetic mean (the regular
“average” you’re used to). 

The weighted mean is a type of mean that is calculated by multiplying the weight (or
probability) associated with a particular event or outcome with its associated quantitative
outcome and then summing all the products together. It is very useful when calculating a
theoretically expected outcome where each outcome has a different probability of
occurring, which is the key feature that distinguishes the weighted mean from
the arithmetic mean.

The benefit of using a weighted average is that it allows the final average number

to reflect the relative importance of each number that is being averaged

Formula for Weighted Mean.

To use the formula:

1. Multiply the numbers in your data set by the weights.

2. Add the numbers in Step 1 up. Set this number aside for a moment.
3. Add up all of the weights.
4. Divide the numbers you found in Step 2 by the number you found in Step 3.
 9

https://www.youtube.com/watch?v=cju3pyafwCI weighted mean

https://www.youtube.com/watch?v=Yl1aOD3CZbM weighted mean
https://www.wallstreetmojo.com/weighted-mean-formula/

Weighted mean is calculated by multiplying the weight with the quantitative outcome
associated with it and then adding all the products together. If all the weights are equal,
then the weighted mean and arithmetic mean will be the same.

Where

∑ denotes the sum

w is the weights and
x is the value
In cases where the sum of weights is 1,

 
Calculation of Weighted Mean (Step by Step)
Step 1: List the numbers and weights in tabular form. Presentation in tabular form is not
compulsory but makes the calculations easy.
 10

Step 2: Multiply each number and relevant weight assigned to that number (w 1 by x1, w2 by
x2 and so on)
Step 3: Add the numbers obtained in Step 2 (∑x1wi)
Step 4: Find the sum of the weights (∑wi)
Step 5: Divide the total of the values obtained in Step 3 by the sum of the weights obtained
in Step 4 (∑x1wi/∑wi)
Note: If the sum of the weights is 1, then the total of the values obtained in Step 3 will be
the weighted mean.
 
Examples
Example #1
The following are 5 numbers and the weights assigned to each number. Calculate the
weighted mean of the above numbers.
Solution:

WM will be –

Example #2
 11

The CEO of a company has decided that he will continue the business only if the
return on capital is more than the weighted average cost of capital. The company
makes a return of 14% on its capital. The capital consists of equity and debt in the
proportion of 60% and 40% respectively. The cost of equity is 15% and the cost of
debt is 6%. Advise the CEO on whether the company should continue with its
business.

Solution:
Let us first present the given information in tabular form to understand the scenario under.
We will use the following data for the calculation.

WM =0.60*0.15 + 0.40*0.06
= 0.090 + 0.024

Since the return on capital at 14% is more than the weighted average cost of capital
of 11.4%, the CEO should continue with his business.
 

Example #3
It is difficult to gauge the future economic scenario. The stock returns could get
affected. The finance advisor develops different business scenarios and expected
stock returns for each scenario. This would enable him to make a better investment
decision. Calculate the weighted mean average from the above data to help the
Investment Advisor to showcase the expected stock returns to his clients.
Solution:
We will use the following data for the calculation.
 12

=0.20*0.25 + 0.30*(-0.10) + 0.50*0.05

= 0.050 – 0.030 + 0.025
WM will be –

The expected return for the stock is 4.5%.

Example #4
Jay is a rice merchant who sells various types of rice in Maharashtra. Some rice
grades are of higher quality and are sold at a higher price. He wants you to calculate
the weighted mean from the following data:
Solution:
We will use the following data for the calculation.

Step 1: In Excel, there is an inbuilt formula for calculating the products of the numbers and
then their sum, which is one of the steps in calculating the weighted mean. Select a blank
cell and type this formula = SUMPRODUCT(B2: B5, C2: C5) where the range B2: B5
represents the weights and the range C2: C5 represents the numbers.
 13

Step 2:  Calculate the sum of the weights using the formula =SUM(B2:B5) where the range
B2:B5 represents the weights.

Step 3: Calculate =C6/B6,

WM will be –

This gives the WM as Rs 51.36.

Median
 14

MEDIAN

Median is the "middle" or mid value of a data set.

To find the median, you have to first order the numbers - from smallest to largest,
and then find the middle number.

Basic examples

 In a set of three numbers - the middle number is the number in 2nd position.

 So, in a set of 10, 20, 30, the middle number is 20.

 In a set of five numbers - the middle number is the number in 3rd position since
there are two numbers before it and two numbers after it.

 So, in a set of 10, 20, 30, 40, 50, the middle number is 30.

Example with detailed explanation

Find the median of the following numbers :

10, 15, 50, 45, 60, 90, 25
  
Median is 45.

Explanation:
1. When you put the numbers in numerical order, it will look like this:
10, 15, 25, 45, 50, 60,90
2. There are seven numbers in the series, and out of which the middle number is the fourth
from the start. This divides the set into two equal parts - three on the left side and three on the
right side of the fourth number.
3. So, the median is 45.

Median of Ungrouped Data

The formulas for calculating the median of an ungrouped data, which has "n" number of
observations are:
 15

Ungrouped Data Median Example

Example 1:

Median of coffee prices

There are 7 boxes of coffee, which are priced as below (in US dollars). Find the median.
65, 49, 87, 54, 90, 95, 70.

   Median is 70
Explanation :
First of all, we need to arrange the data in the ascending order. The arranged data is:
  49
  54
  65
  70
  87
  90
  95
Number of observations = 7 (odd)
Since the number of observations is odd, we can find the median using the following
formula:

median = (n + 1)/ 2 where n = frequency

median = (7+1) /2
median = 4, the fourth is 70.

Example 2:

Median of sugar packets

There are 10 packets of biscuits with sugar content (in grams) as shown below. Find the
median.
20, 35, 18, 40, 34 , 42, 25, 30, 29, 44

   Median is 32
Explanation :
Given data needs to be arranged in ascending order as shown in the table below :
 18
 20
 25
 29
 30
 34
 35
 40
 42
 44
Number of observations = 10 (even)
Since the number of observations is even, we can find the median using the following
formula:
Median = (5th + 6th)/2
Median = (30 + 34)/2
Median = 32
 16

https://www.ipracticemath.com/learn/statistics/median
What is Mode?
The most frequently occurring observation in a data set is called Mode (also known as
modal value).This is a measure of the tendency of the data values.
Example
Find the mode of 2, 5, 5, 8 and 9
In this case, the most frequently occurring value is 5. So, the mode is 5.

How to Find Mode of a Data?

Mode of Ungrouped Data

Mode of an ungrouped data is equal to the most frequent observation in the data.
Data can consists of more than one mode.

A data distribution with one mode value is called unimodal whereas distributions
with more than one mode values is called multimodal (they can be bimodal, trimodal etc.)

Example 1

Find mode of the record of marks shown below:

4, 6, 7, 7, 8, 9, 3, 9, 8, 6, 5, 5, 5, 4, 3, 8, 2, 7, 9, 2, 4, 8, 6, 9, 8

State whether the distribution is unimodal, bimodal or trimodal.

 The mode is 8, and the data distribution is unimodal.
Explanation:
First we arrange the data in the ascending order as shown below :

2, 2, 3, 3, 3, 4, 4, 4, 5, 5, 5, 6, 6, 6, 7, 7, 7, 8, 8, 8, 8, 8, 9, 9, 9, 9

Next we try to determine the most frequently occurring observation, which in this case is 8.
=> Mode = 8

Since there is only one most frequently occurring value (which is 8), the data distribution is
unimodal.
Example 2

Find mode of the record of marks shown below:

1, 3, 5, 3, 2, 4, 4, 5, 6, 1, 3, 4, 2, 5, 1, 1, 3, 2, 6, 4

State whether the distribution is unimodal, bimodal or trimodal.

 The modal values are 1, 3 and 4, and the data distribution is trimodal.
Explanation:
First we arrange the data in the ascending order as shown below:
1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 5, 5, 5, 6, 6
Next we try to determine the most frequently occurring observation. Note that each of 1, 3
and 4 appear 4 times.
Therefore 1, 3, 4 are modes of the given set of data.
=> Modal values = 1, 3, 4
Since there are 3 modal values in the given data set, the data distribution is trimodal.
https://www.ipracticemath.com/learn/statistics/mode