Seasonal Components – NBC Institute

QT – May 2016 – L1 – Q2 – Forecasting

This question asks for the creation of a linear regression trend equation, seasonal components, and forecasts for chocolate sales.

Question

Countess Company trades in bars of Golden Tree Chocolate from Tema Cocoa Processing Company Limited. The number of bars of chocolate sold per quarter over a four-year period by Countess Company is:

YEAR	QUARTER 1	QUARTER 2	QUARTER 3	QUARTER 4
1	20	10	4	11
2	33	17	9	18
3	45	23	11	25
4	60	30	13	29

Required:

i) Plot the data on a graph (3 marks)

ii) Calculate a linear regression trend equation for the data (5 marks)

iii) Calculate the four seasonal components using a multiplicative model (5 marks)

iv) Forecast the number of bars of chocolate for the next two years (5 marks)

v) Comment on the reliability of the forecasts in iv) above (2 marks)

Answer

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Tags: Forecasting, Linear Regression, Multiplicative Model, Seasonal Components, Time series
Level: Level 1

Topic: Forecasting
Series: MAY 2016

IMAC – JULY 2023 – L1 – Q5 – Budgeting | Forecasting

Prepare seasonally adjusted sales forecast and production overheads budget, and explain key components of time series analysis.

Question

Question:
a) Balan Ltd is engaged in manufacturing and selling a single product and is in the process of preparing its budget for 2024. The following information is available:

Sales:
Balan Ltd has developed the linear relationship Y = 20,000 + 4,000X, where X represents the time period (X = 1 for the 1st quarter of 2024) and Y represents the sales trend in units.

The following seasonal variations are required to be adjusted to the sales trend in order to arrive at the sales forecast:

Quarter	Jan-Mar	Apr-Jun	Jul-Sep	Oct-Dec
Index value	110	90	80	120

A unit of product can be sold at GH¢1,000 during the first three quarters, and this price will be increased by 10% in the fourth quarter of 2024.

Production Overheads:
Based on the past 6 quarters’ results, the following statistical data has been gathered:
n = 6 (where ‘n’ is the number of quarters considered)
∑X = 306 (where ‘X’ is the production quantity in thousands of units)
∑Y = 146,400 (where ‘Y’ is the total production overheads in GH¢ thousands)
∑XY = 7,578,400
∑X² = 15,886

Balan Ltd estimates a linear relationship between output (X) and production overheads (Y), and the total production overheads can be expressed as Y = a + bX.

Balan Ltd does not maintain finished goods inventories. You are one of the Management Accounting executives of Balan Ltd and have been requested to assist in compiling budget figures.

Required:
i) Prepare the seasonally adjusted quarterly sales forecast in unit and in value for the calendar year 2024. (4 marks)
ii) Prepare the quarterly production overheads budget for the calendar year 2024. (5 marks)

b) Explain the following terms:
i) Trend-Cycle (C) (2 marks)
ii) Seasonal Components (S) (2 marks)
iii) Irregular Components (I) (2 marks)

c) The purpose of Management Accounting is to provide information for planning, control, and decision making. Information for control of the performance is an important management task.

Required:
Outline THREE (3) activities involved in providing information for control purposes. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Irregular Components, Production Overheads Budget, Sales Forecasting, Seasonal Components, Trend-Cycle
Level: Level 1

Topic: Budgeting, Forecasting
Series: JULY 2023

QT – May 2016 – L1 – Q2 – Forecasting

This question asks for the creation of a linear regression trend equation, seasonal components, and forecasts for chocolate sales.

Question

Countess Company trades in bars of Golden Tree Chocolate from Tema Cocoa Processing Company Limited. The number of bars of chocolate sold per quarter over a four-year period by Countess Company is:

YEAR	QUARTER 1	QUARTER 2	QUARTER 3	QUARTER 4
1	20	10	4	11
2	33	17	9	18
3	45	23	11	25
4	60	30	13	29

Required:

i) Plot the data on a graph (3 marks)

ii) Calculate a linear regression trend equation for the data (5 marks)

iii) Calculate the four seasonal components using a multiplicative model (5 marks)

iv) Forecast the number of bars of chocolate for the next two years (5 marks)

v) Comment on the reliability of the forecasts in iv) above (2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Forecasting, Linear Regression, Multiplicative Model, Seasonal Components, Time series
Level: Level 1

Topic: Forecasting
Series: MAY 2016

IMAC – JULY 2023 – L1 – Q5 – Budgeting | Forecasting

Prepare seasonally adjusted sales forecast and production overheads budget, and explain key components of time series analysis.

Question

Question:
a) Balan Ltd is engaged in manufacturing and selling a single product and is in the process of preparing its budget for 2024. The following information is available:

Sales:
Balan Ltd has developed the linear relationship Y = 20,000 + 4,000X, where X represents the time period (X = 1 for the 1st quarter of 2024) and Y represents the sales trend in units.

The following seasonal variations are required to be adjusted to the sales trend in order to arrive at the sales forecast:

Quarter	Jan-Mar	Apr-Jun	Jul-Sep	Oct-Dec
Index value	110	90	80	120

A unit of product can be sold at GH¢1,000 during the first three quarters, and this price will be increased by 10% in the fourth quarter of 2024.

Balan Ltd estimates a linear relationship between output (X) and production overheads (Y), and the total production overheads can be expressed as Y = a + bX.

Balan Ltd does not maintain finished goods inventories. You are one of the Management Accounting executives of Balan Ltd and have been requested to assist in compiling budget figures.

b) Explain the following terms:
i) Trend-Cycle (C) (2 marks)
ii) Seasonal Components (S) (2 marks)
iii) Irregular Components (I) (2 marks)

c) The purpose of Management Accounting is to provide information for planning, control, and decision making. Information for control of the performance is an important management task.

Required:
Outline THREE (3) activities involved in providing information for control purposes. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Irregular Components, Production Overheads Budget, Sales Forecasting, Seasonal Components, Trend-Cycle
Level: Level 1

Topic: Budgeting, Forecasting
Series: JULY 2023

Question Tag: Seasonal Components

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QT – May 2016 – L1 – Q2 – Forecasting

This question asks for the creation of a linear regression trend equation, seasonal components, and forecasts for chocolate sales.

IMAC – JULY 2023 – L1 – Q5 – Budgeting | Forecasting

Prepare seasonally adjusted sales forecast and production overheads budget, and explain key components of time series analysis.

QT – May 2016 – L1 – Q2 – Forecasting

This question asks for the creation of a linear regression trend equation, seasonal components, and forecasts for chocolate sales.

IMAC – JULY 2023 – L1 – Q5 – Budgeting | Forecasting

Prepare seasonally adjusted sales forecast and production overheads budget, and explain key components of time series analysis.

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Question Tag: Seasonal Components

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QT – May 2016 – L1 – Q2 – Forecasting

This question asks for the creation of a linear regression trend equation, seasonal components, and forecasts for chocolate sales.

You're reporting an error for "QT – May 2016 – L1 – Q2 – Forecasting"

IMAC – JULY 2023 – L1 – Q5 – Budgeting | Forecasting

Prepare seasonally adjusted sales forecast and production overheads budget, and explain key components of time series analysis.

You're reporting an error for "IMAC – JULY 2023 – L1 – Q5 – Budgeting | Forecasting"

QT – May 2016 – L1 – Q2 – Forecasting

This question asks for the creation of a linear regression trend equation, seasonal components, and forecasts for chocolate sales.

You're reporting an error for "QT – May 2016 – L1 – Q2 – Forecasting"

IMAC – JULY 2023 – L1 – Q5 – Budgeting | Forecasting

Prepare seasonally adjusted sales forecast and production overheads budget, and explain key components of time series analysis.

You're reporting an error for "IMAC – JULY 2023 – L1 – Q5 – Budgeting | Forecasting"

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