I'm planning with my friend for a 2 week vacation to Europe, How much will cost on a average, assuming i cover my trip on cheapest means and staying in average priced hotels?

If you mean Western/Northern Europe, then you should be able to do the trip in 50-60 Euros a day including hostel (twin sharing room), public transport and non-fancy food (take-away instead of restaurants) ... and maybe a pint or two of beers. Supermarket food can save you some money. Norway and to some extent Denmark are more expensive so might go up to 70-80E. Central/Eastern Europe (not counting Austria) will be about 20-40% cheaper, depending on which country you are in. Apart from that you can add the costs for going from once country to the other. Trains can sometimes be REALLY expensive if not booked in advance. You can always use websites like http://couchsurfing.com to stay with locals and save some money and use ride sharing websites like http://blablacar.com to get a good price and company. All in all on an average you should look at something like 800 Euros from the time you land in Europe, till you fly out. I travelled 17 days in Germany, Netherlands, Belgium and Austria for 700 Euros but I spent half of those nights staying with locals (strangers or friends) and that was in 2007.