In the current set-up (as explained through the help chat), if a student is exempt from a semester exam, a teacher has to hand select the formula for each student in the report card window to be able to calculate a semester average without an exam. If you enter the exam grade in the grade book, it does not pull over to the report card.
A simple solution would be to enter the semester exam grade in the grade book as a "third quarter" and then on the report card page have the semester average calculate by pulling the averages from the 1st quarter and 2nd quarter averages as well as the semester exam average. Also, if a teacher entered "ex" (or some other designation for exempt; can't be blank as those calculate as zeros), then the calculate function on the report card would automatically use a formula that just averaged 1st and 2nd quarters.
This should be an easy coding fix as the three previous platforms I've used in other schools operate in this manner.
I agree that you should just be able to enter ex in the field to exempt an exam grade rather than the bulky calculations.