ACCA Applied Knowledge · Management Accounting · Analytical techniques in budgeting and forecasting
A company's quarterly sales trend is y = 2,000 + 40x, where y is units and x is the period number. Period 1 is Quarter 1 of Year 1. The multiplicative seasonal factor for Quarter 1 is 1.10. What is the forecast for Quarter 1 of Year 4 (period 13)?
The forecast is 2,772 units. Year 4 Quarter 1 is period 13, so the trend is 2,000 plus 40 times 13, which is 2,520. Applying the multiplicative seasonal factor of 1.10 gives 2,772. Using period 12 or dividing by the factor would give wrong results.
- A2,772 unitsCorrect
- B2,728 units
- C2,520 units
- D2,291 units
Explanation
Trend at x = 13 is 2,000 + 40 × 13 = 2,520. Multiply by 1.10 to get 2,772. Using x = 12 gives 2,728, which is a wrong period number. 2,520 omits seasonality. 2,291 divides by the factor instead of multiplying.
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