CMA Foundation · Fundamentals of Business Mathematics and Statistics · Index Numbers and Time Series
For a firm's quarterly sales, the average sales of each quarter over several years are: Quarter I ₹96 lakh, Quarter II ₹104 lakh, Quarter III ₹112 lakh and Quarter IV ₹88 lakh. Using the method of simple averages, what is the seasonal index for Quarter III?
The seasonal index for Quarter III is 112. Under the simple averages method, the quarter's average of 112 is divided by the grand average of 100 and multiplied by 100. The figure 12 is just the excess over the grand average, not the index.
- A112Correct
- B12
- C104
- D88
Explanation
Grand average = (96+104+112+88)/4 = 400/4 = ₹100 lakh. Seasonal index for Quarter III = 112/100 × 100 = 112. The value 12 is only the deviation from the grand average and is not an index.
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