CMA Intermediate · Management Accounting · Forecasting, Budgeting and Budgetary Control
A Delhi retailer's quarterly sales have seasonal indices of Q1 90, Q2 110, Q3 120 and Q4 80 (average 100). The deseasonalised trend value for the coming Q3 is Rs 5,00,000. What is the seasonally adjusted forecast for Q3?
The adjusted forecast is Rs 6,00,000. With a multiplicative model, the trend value of Rs 5,00,000 is multiplied by the Q3 seasonal index of 120 per cent. Dividing by the index would wrongly give Rs 4,16,667.
- ARs 4,16,667
- BRs 5,00,000
- CRs 5,20,000
- DRs 6,00,000Correct
Explanation
Forecast = trend x seasonal index/100 = 5,00,000 x 1.20 = Rs 6,00,000. Dividing by 1.20 gives 4,16,667, which is the wrong direction. Using Q2 index 110 would give 5,50,000.
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