How the average grade is computed when using categories with weights
Select your Course. Select "Grades" in the top menu. Click "Settings". Click the "Settings of categories" button in the "Assignments and categories" tab.  
The following example illustrates calculating the average:
Let's presume the teacher of English awards the students grades. The teacher wants the Reading and Writing sections to have double the weight of Speaking. The teacher should use categories with weights as follows: Reading weight 40, Writing weight 40, Speaking weight 20.
The teacher can use weights within the category as well. For example: there are two tests in the Writing category. One of them has the weight 1, the other has double weight. The situation is similar within the Speaking category.
How is the student's average computed?
a) First, the weighted average within individual categories is computed. 
b) Then, the weighted average of the categories is computed.
Computing the average grade of student Adam Benko: 
The student has grades only in the Writing category. Grade 1 with single weight and grade 5 with double weight (i.e. the grade counts twice into the average). The average within the category is computed as common weighted average, in this case (1+5+5)/3=3,67
Accordingly, student Jane Green has grades only in the Speaking category.
Student Rebecca Mortimer has grade 1 in the Writing category and grade 5 in the Speaking category. Computing the average within each category is easy, as each category includes only one grade. When computing the average of the categories, they are computed with the set category weight.
The situation of Melinda Ross is more interesting. The student has two grades in each category. The weighted average within each category is computed first. Weighted average within the writing category: (1+5+5)/3=3,67. Weighted average within the Speaking category: (5+1+1)/3=2,33. Results for both categories are computed into the total average with the respective weight for each category: (40*3,67 + 20*2,33)/(40+20)=3,22
 
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