The following sales figures are available for the last two years. All of the figures represent actual sales except for quarter 2 of 2012, which is an estimate. The financial director is satisfied that this estimate can be relied upon.
The following centred moving averages have been calculated, using a base period of four quarters:
The average seasonal variations for 2010 have already been made available to you and are 0·908 for quarter 3 and 1·082 for quarter 4. The random component is negligible and can therefore be ignored.
Required:
(a) Using the information provided above, and assuming a proportional (multiplicative) model, forecast the sales of Sauce Co for the last two quarters of 2012. Calculate your seasonal adjustments to four decimal places. (10 marks)
(b) Discuss the likely impact that the budgeting style. and inaccurate sales forecasts have had on the staff and business of Sauce Co. (10 marks)