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

Using an additive model, the average seasonal variations calculated for three quarters are Q1 +40, Q2 -15 and Q3 -60. What should the seasonal variation for Q4 be, so that the variations are properly adjusted?

Q4 should be +35. In an additive model the seasonal variations across one full cycle must total zero. The first three quarters add to -35, so the fourth must be +35 to offset them. Any other figure leaves the seasonal adjustments unbalanced.

  1. A+35Correct
  2. B-35
  3. C+15
  4. D+25

Explanation

Additive seasonal variations over a full cycle must sum to zero. Q1 + Q2 + Q3 = 40 - 15 - 60 = -35, so Q4 must be +35. -35 would leave the total at -70, and the other options do not bring the sum to zero.

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