Question

The forecast for the third quarter is 2,000 units; the seasonal index for the quarter is 1.18. What are the seasonally adjusted sales for the quarter?

Answer 1

Answer:

Forecast for the quarter= Forecast for third quarter * Seasonal Index

Putting values in the equation:

Forecast for the quarter= 2000 units * 1.18= $2360

This forecasting method adjusts the previous period amounts to obtain an amount which reflects the seasonal changes. It is widely used in management accounting to estimate future sales while making budgets.