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Hi Sir
Question: The trend for sales of Product A is presented by the following:
y=100+3000x where:
y=trend for sales in a quarter
x=the quarter number, where 1= quarter 1 of year 1, and so onActual sales of product A in year 1 were affected by seasonal variations. The number of units sold in quarter 2 was 18,000
My answer:
Year 1 Quarter 2: 10000+(3000×2) = 16,000 , Actual unit sold in quarter: 18000. Therefore the variation is +2000
In year 2 Quarter 2: 10000+(3000×6) = 28000 + 2000 = 30000.
Is this correct?
Hi Sir
There is another question which I’m not sure about answer it but I have tried and I want to know if I’ve calculated it right.
The overhead costs of a company can be estimated using the formula:
y=$20000 + $0.50x
where y is the monthly cost and x represent the monthly activity level measure in unitsMonthly activity levels in units may be estimated using a time series model:
a= 50000 + 20b
where a represents the monthly activity level and b represents the month number.
in month 300, when the seasonal index is 105, what is the overhead cost expected to be?
My answer:
a=50000 + (20 x 300)
a= 50000 + 6000
a= 56000y= 20000 +(0.50 x 56000)
y= 20000 + 28000
y= 48000therefore the o/head cost expected to be: 48000 x 105 = $5,040,000
Is this correct?
Question 1: You have not written the full question! Assuming it asked for a forecast of the actual sales in quarter 2 of year 2, and wants you to use the additive model, then your answer is correct.
Question 2: Your answer seems correct.
However, what I do not understand it why the book in which you found these questions does not also have the answers???
the answers are just in figures, no calculations and my answers are wrong. That’s why I’m going to contact the company where I purchased my study materials from.
According to my course provider, ‘These
answers do not provide explanation as to why a particular answer is or is not correct – students are encouraged to revisit their learning materials to determine the source of any incorrect attempts at answers.’The actual answer is 31500 for the question 1, To complete the question, it says that, What are the expected sales of Product A (in units) for year 2, quarter 2, after adjusting for seasonal variations using multiplicative model?
For question 2, the correct answer 49400
What have I done wrong with my answers in question 1 and question 2?
Hello sir
I have figured the answers for Question 1 and question 2 why they are: 31500 and 49400. Please correct me if these are wrong.
For year 2
Quarter 1 = 10000 (3000 x 5) = 10000 + 15000 = 25000
Q2 = 10000 + (3000 x 6 ) = 28000
Q3 = 31000
Q4 34000The average between quarter 2 and quarter 3 is 29500 (28000 + 31000) 59000/2 = 29500 + 2,000 from the seasonal variation of = 31500.
Question 2
My answer:
Month 300 has a seasonal index value of 105.
a=50000 + (20 x 300)
a= 50000 + 6000
a= 56000
a = 5600 x 1.05 = 58800y= 20000 +(0.50 x 58800)
y = 20000 + (29400)
y = 49400For question 1, you had originally calculated assuming they were using the additive model (as I wrote in my reply).
As they actually wanted you to use the multiplicative model. The you should have forecast the trend as you originally did (and arrived at 28,000). However to adjust for the seasonal variation using the multiplicative model, what you should have done is found the variation in quarter 2, which was 18,000/16,000 = 1.125, and then applied this to your figure of 28,000. So 28,000 x 1.125 = 31,500For question 2, what you have done now is correct. (Although the question is appalling if it actually said ‘seasonal index value’ because that wording is only used to refer to price indexes, which would give a different answer.
For your book to say that the answers do not provide explanations is dreadful. I don’t know who published them, but I really think that you would be better using one of the ACCA approved publishers – Kaplan or BPP – who do provide proper explanations. They are charging and so you have a right to expect proper explanations 🙂
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