The HUD worksheet calculates averages based on the values entered. If O/As only have 10 months of data and enter 0 in the other two months, the average will calculate on all months that have data. Is this correct?

No, O/As should not enter any value for the months that are vacant (do not enter $0). Or, using the unprotected version of the worksheet that is now available, change the formula so that the average is calculated on only non-zero months. If O/As have only 10 months of data, the average must be calculated on only those 10 months.