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Forecasting
4.13Unemployment figures actual recorded 4700
Underlying trend for this period was 4300 and seasonal factor is .92.Using multiplicative model. calculate seasonally adjusted figure to the nearest whole number for the quarter.
The answer is given as 4700/.92=5109 but with no accompanying explanation.
I’m having trouble understanding why this method is being employed,could you please explain it to me?
If we are forecasting then we would take the trend of 4,300 and multiply by the seasonal factor.
However here we are not forecasting because we know that the actual figure is 4,700. We also know that because of seasonality, the figure is 0.92 times whatever it would be if there was no seasonality,
So if, without the seasonality, it had been X, then X x 0.92 = 4,700.Therefore X = 4,700 / 0.92 = 5,109.
Thank you! I have another one, if you dont mind.
Following relates to companies O/H cost
Time – Output – O/H cost – Price Index
2 years ago – 1000 – 3700 – 121
current year – 3000 – 13000 – 151Use High Low technique, what is variable cost per unit expressed in current year prices.
Answer says 3700×151/121= O/H cost in current year price and the rest is standard H-L technique.
I was wondering why we use 151/121×3700. I know you explained it in the lecture but I had been using a longer method using linear equation because that was easy for me to understand. It made sense when the c/unit was involved but with total costs it isnt falling into place as much.
I don’t mind at all. However in future please do start a new thread when you are asking about a different topic. The reason is that our answers are to help all students and many use the search box to see if their problem has been dealt with before.
The index numbers mean that for every $121 cost two years ago, the cost now will be $151.
So if something cost $3,700 two years ago, it will now cost 151/121 x $3,700.
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