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Concepts and Definitions

The mean is the most commonly used average. It is derived by adding up the values from all observations and dividing it by the total number of observations:

 
Example 1 shows you how it works.
 
Example 1: Monthly Basic Wage


The monthly basic wages of employees in Company XYZ are shown in the table below. What is the mean monthly basic wage for this group of employees?

Monthly Basic Wage of Employees in Company XYZ

   

The mean monthly basic wage is derived by adding the basic wage for all employees in company XYZ, and dividing this by the number of employees.

Essentially, the mean monthly basic wage is also the amount that each person in the group will receive if the total basic wages of the group is distributed equally among them. 

Monthly Basic Wage of Employees in Company XYZ