Some quarters are above the average and some are below the average. Since the average is in the ‘middle’ the total of the differences above the average must be the same as the total of the differences below the average – so they should add up to zero.

I assume you mean the total of the seasonal variations. Each of them are a little above or a little below 100%. The average of all of them should be 100% and therefore the total of 4 of them should be 400%

It is not the averages that add up to zero. It is the differences from the averages that should add up to zero – some are below the average and some are above the average, but the average is in the middle.

The 4-quarter average of the first four quarters is in the middle – so is in between quarters 2 and 3.
Similarly the 4 quarters average of the next four quarters is in the middle – so is between quarter 3 and 4.

When we centre them we take the average of the middle of quarters 2 and 3 and the middle of quarters 3 and 4, and this then corresponds to quarter 3.

The differences are all differences about an average – some are above the average and some are below the average but because they are all difference about an average the net figure should be zero. As I explain in the lecture, the reason they don’t exactly add up to zero is because the first two and the last two observations have nothing to compare with.

At the moment they add up to a total of +0.69, so to make the total add up to zero we need to subtract 0.69. We subtract an equal amount from each of the 4 quarters. However because 0.69/4 = 0.1725 and we are only working to 2 decimal places, we subtract 0.18 from one of them and 0.17 from the others (and it does not matter at all which one you subtract 0.18 from).

The only reason for wanting to know the average change in the trend would be for forecasting for the future. To forecast the trend we would take the total change for the periods given in the question and divide by the number of periods to get the average change per period.

The calculated percent of the 3rd quater of year 2000 is 95.35 but while taken down to calculate the average percent it was entered as 91.35. Therefore the average percent of the 3rd quater should be 95.38 and there should be a difference of 2 ?

Thanks. I will check and if I have made a mistake I will correct it.
However the idea should still be clear (and I think the printed answer in the notes is still correct 馃檪 )

Not the whole exercise – just extracts from it (but you need to understand the whole exercise to be able to be able to attempt extracts).
You will find plenty of examples of how it can be asked in your Revision Kit (you must buy a Revision Kit from one of the ACCA approved publishers, because they have lots of exam-standard questions for you to practice).

Hi I think there is an error in the video, when calculating the Multiplicative Model quarterly average the Q3 amount was written as 91.35% and not 95.35%, just want to know if i miss understood.

The reason I am asking is because the comments have disappeared from all the video lectures and there is a slight tuning prior to the point in the video where they say “This is a lecture from open tuition…….” and also the headings to all chapters are printed in red (or blue I am guessing) and not written with the black marker like it was previously…..?

Why is it that the actual value (when calculating seasonal variation) is taken from the third quarter; why is it that the first two quarters of the year 2000 are not considered?

Mohamed.alasfoor.bh@gmail.com says

Great. Explained very well.

John Moffat says

Thank you for your comment 馃檪

Asif110 says

The formula to find out the Average trend is:

(Last trend – first trend) / (no. of set of data – 1)

I want to understand why we minus by 1.

John Moffat says

Don’t rely on learning formulae for this exam.

Suppose there are four observations: 1, 2, 3 and 4

There are three differences 1 to 2; 2 to 3, and 3 to 4.

Asif110 says

Thanks sir for the logic. This is what I was looking for.

acca324 says

what is the reason the average needs to be brought down to zero? I don’t understand this area.

John Moffat says

Some quarters are above the average and some are below the average. Since the average is in the ‘middle’ the total of the differences above the average must be the same as the total of the differences below the average – so they should add up to zero.

acca324 says

Under Multiplicative model, I think there is an error under 2000 q3. shouldn’t it be 95.35% instead of 91.35%

John Moffat says

Yes it should – it is a silly mistake of mine. However the printed answer in the lecture notes has it correct 馃檪

Kyle says

Hi John,

If using the results of example 1 to forecast using regression analysis, which sets of figures would be considered X and which would be Y?

Many thanks,

John Moffat says

Y would be the sales, and X would be the quarters (numbered consecutively).

Shimaehsani says

Thank you, John, for the lecture. Why it is 400, where this number comes from?

John Moffat says

I assume you mean the total of the seasonal variations. Each of them are a little above or a little below 100%. The average of all of them should be 100% and therefore the total of 4 of them should be 400%

Shimaehsani says

Thank you so much. I understand know.

John Moffat says

You are welcome 馃檪

ahmedirfun says

I don’t understand why the sum of the averages have to add up to 0

John Moffat says

It is not the averages that add up to zero. It is the differences from the averages that should add up to zero – some are below the average and some are above the average, but the average is in the middle.

Patience01 says

Thank you so much. This lecture really simplified this for me.

Jessicaseri says

Hi

I don’t understand why the centred average of 86 is said to be near quarter 3 than 2?

Please could you explain to me

John Moffat says

The 4-quarter average of the first four quarters is in the middle – so is in between quarters 2 and 3.

Similarly the 4 quarters average of the next four quarters is in the middle – so is between quarter 3 and 4.

When we centre them we take the average of the middle of quarters 2 and 3 and the middle of quarters 3 and 4, and this then corresponds to quarter 3.

tabasumze says

Hi,

In the multiplicative model, the total averages arrives to 400.26%,so do we need to reduce the .26% to arrive at 400%??

John Moffat says

Yes 馃檪

tabasumze says

OK, thank you 馃檪

John Moffat says

You are welcome 馃檪

mirakeryo26 says

Hi, I don’t understand why total +0.69 must be substracted until it become zero? Where do -0.17 and -0.18 come from?

John Moffat says

The differences are all differences about an average – some are above the average and some are below the average but because they are all difference about an average the net figure should be zero. As I explain in the lecture, the reason they don’t exactly add up to zero is because the first two and the last two observations have nothing to compare with.

At the moment they add up to a total of +0.69, so to make the total add up to zero we need to subtract 0.69. We subtract an equal amount from each of the 4 quarters. However because 0.69/4 = 0.1725 and we are only working to 2 decimal places, we subtract 0.18 from one of them and 0.17 from the others (and it does not matter at all which one you subtract 0.18 from).

accountaholic says

How do you calculate average change in the trend?

John Moffat says

The only reason for wanting to know the average change in the trend would be for forecasting for the future. To forecast the trend we would take the total change for the periods given in the question and divide by the number of periods to get the average change per period.

aramontshonyana says

I was able to find them….

?

ritwick says

The calculated percent of the 3rd quater of year 2000 is 95.35 but while taken down to calculate the average percent it was entered as 91.35. Therefore the average percent of the 3rd quater should be 95.38 and there should be a difference of 2 ?

John Moffat says

Thanks. I will check and if I have made a mistake I will correct it.

However the idea should still be clear (and I think the printed answer in the notes is still correct 馃檪 )

grace3496 says

For additive model, it should add up to 0 because the variations are above or less than 0?

John Moffat says

Correct 馃檪

Martin says

will all of the above be required in the exam?

John Moffat says

Not the whole exercise – just extracts from it (but you need to understand the whole exercise to be able to be able to attempt extracts).

You will find plenty of examples of how it can be asked in your Revision Kit (you must buy a Revision Kit from one of the ACCA approved publishers, because they have lots of exam-standard questions for you to practice).

rochwal says

Hi I think there is an error in the video, when calculating the Multiplicative Model quarterly average the Q3 amount was written as 91.35% and not 95.35%, just want to know if i miss understood.

John Moffat says

Yes – you are correct. Sorry 馃檨

The answer at the back of the free lecture notes is correct 馃檪

shaheena98 says

Have the videos been updated?? I see a few differences compared to the videos that I saw last week……

John Moffat says

You can’t have, because nothing has changed since last week 馃檪

shaheena98 says

The reason I am asking is because the comments have disappeared from all the video lectures and there is a slight tuning prior to the point in the video where they say “This is a lecture from open tuition…….” and also the headings to all chapters are printed in red (or blue I am guessing) and not written with the black marker like it was previously…..?

John Moffat says

I don’t understand. The lectures have not changed, and all the comments are still here 馃檪

shaheena98 says

Why is it that the actual value (when calculating seasonal variation) is taken from the third quarter; why is it that the first two quarters of the year 2000 are not considered?

John Moffat says

Because (as I do explain in the lecture) there is nothing to compare the first two (and the last two) quarters with.

shaheena98 says

Ohh I get it now…makes sense thank you!

John Moffat says

Great 馃檪