ACCA Applied Knowledge · Management Accounting · Summarising and analysing data
A trend line has been fitted to quarterly data as y = 500 + 12x, where x = 1 for Q1 of Year 1. The additive seasonal variations are Q1 -20, Q2 +5, Q3 +30, Q4 -15. What is the forecast for Q3 of Year 3?
The forecast should be 662, but this does not appear in the options, so the question is flawed.
- A686Correct
- B656
- C674
- D716
Explanation
Q3 of Year 3 is the 11th quarter, so x = 11. Trend = 500 + 12×11 = 632. Adding seasonal variation +30 gives 662. Checking the quarter count: Year 1 quarters 1-4, Year 2 quarters 5-8, Year 3 Q1 = 9, Q2 = 10, Q3 = 11. So the correct result is 662, which is not among the offered values; the nearest wrongly built options use x=12 or other errors.
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