#N/A error is sometimes used to show gaps in charts, however, the AVERAGE function can't process errors, shown in C11 in the picture above.
There is an easy workaround, the AVERAGEIF function allows you to ignore #N/A errors. It was introduced in Excel 2007.
You need to provide a condition, the larger and smaller than signs are the same as "not equal to".
If you have an Excel version earlier than 2007, the ISERROR function works just as fine. The downside is that you need to enter the formula as an array formula.
To enter an array formula, type the formula in a cell then press and hold CTRL + SHIFT simultaneously, now press Enter once. Release all keys.
The formula bar now shows the formula with a beginning and ending curly bracket telling you that you entered the formula successfully. Don't enter the curly brackets yourself.
Download Excel *.xlsx file
AVERAGE ignore NA.xlsx
AVERAGE ignore #N/A for non-contiguous cell ranges
Array formula in cell C11: