Budgeting - Forecast sales using growth trend & seasonal variations

mrderek88

Hi folks

Looking for some help here - its the only part of budgeting that Im not getting my head around.

The question is:

This year's sales are £2,500,000. Analysis of recent years shows:

* growth trend of 2.5% per annum

* seasonal variations from the trend of
Q1 -£40,000
Q2 +£20,000
Q3 +£55,000
Q4 -£35,000

Forecase the sale for each quarter of next year; Q's 1,2,3 & 4



As I said, I just can't get my head around how to do this? Any help would be great - exam next week!!!

Thanks


Derek

mupp

hello,

can you check the answers first though..i sat mine 6 weeks ago so not 100% sure.

This year’s sales is £2,500,000
You have to apply the growth trend of 2.5% -> (£625000) -> sales forecast would therefore be £2500000+£625000= £3125000
As they require trend per quarter, you need to divide £3125000 by 4 = £781250 per quarter. Then you just apply the variations:

Q1 - £781250 – 40000 = £741250
Q2 - £781250 + 20000 = £801250
Q3 - £781250 + 55000 = £836250
Q4 - £781250 – 35000 = £746250

Nps

The above is very nearly correct. You just need to change this years figures to 2,562,500 as the 2.5% increase is 62,500 not 625,000.

After that though the above poster is correct. You divide this by 4 to get each quarters' figures and then add/subtract the variation.

You can then double check you haven't made any mistakes by adding all the monthly figures together to check you get back to the annual figure.

Nps

You should get answers of
600625
660625
695625
605625

mrderek88

Thanks guys - that helps a lot

Should be ok now.... fingers crossed though!!

Also, the answer's from Nps are the correct ones!!


Derek

mupp

Oh dear, sorry about the 0s. I haven't got my budgeting result yet so if I made silly mistakes like that it's not good news!:-p

But good luck to you Derek :-)