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Respected Authority,
CIMA Kaplan Official Study Text the Question is given on Trend analysis. P1 Management Accounting.
Page number 588 part B of question.
Q) Use the trend line to calculate the average increase in sales each season.
The solution in the book is given that ($527,500 – $123,500)/ 8 seasons = $50,500 each season.
My question is why they are dividing it by 8 seasons ? Because in Centered Moving Average (Trend) line there are total 9 seasons.
So instead of 8 it should be divided by 9.?.
Please give me the perfect solution of this.Hi,
Thank you for your question.Ive found the exercise you refer to in Kaplan P1 Text and the number of seasons is correctly stated to be 8.
This is because the moving averages need to be based on complete cycles- e.g. on this exercise it is based on two seasons for each year. You’ll notice that Summer 20X9 does not have any winter data for 20X9 – so you exclude that one because its not a full cycle.
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