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ACCA Applied Knowledge · Management Accounting · Analytical techniques in budgeting and forecasting

Quarterly sales (in $000) were: Year 1 Q1 100, Q2 120, Q3 140, Q4 110, and Year 2 Q1 108. Using a four-point centred moving average as the trend, what is the additive seasonal variation for Year 1 Q3?

The seasonal variation is +21.5 ($000). The centred moving average for Year 1 Q3 is 118.5, found by halving the two end quarters and averaging over four. Actual sales of 140 less this trend of 118.5 give an additive variation of +21.5.

  1. A+21.5Correct
  2. B-21.5
  3. C+22.5
  4. D+18.5

Explanation

Centred trend for Q3 = (100/2 + 120 + 140 + 110 + 108/2) / 4 = 474/4 = 118.5. Variation = actual - trend = 140 - 118.5 = +21.5. Using the uncentred average of four quarters (117.5) gives +22.5. Reversing the subtraction gives -21.5.

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