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CMA Foundation · Fundamentals of Business Mathematics and Statistics · Index Numbers and Time Series

Quarterly seasonal indices computed for a company's sales are 95, 105 and 120 for the first three quarters. What must the seasonal index of the fourth quarter be?

The fourth quarter index must be 80. Four quarterly seasonal indices must add up to 400 because their average is 100. The first three total 320, so the remainder is 80. Picking 100 would ignore that the total must be 400.

  1. A80Correct
  2. B90
  3. C100
  4. D75

Explanation

Quarterly seasonal indices must average 100, so they total 400. The first three sum to 95+105+120 = 320. The fourth index = 400 − 320 = 80. Choosing 100 wrongly assumes every missing index equals the average.

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