Question 1193799: The seasonal indices of sales of a firm are under:
Months Index Months Index
January 106 July 93
February 105 August 89
March 101 September 92
April 104 October 102
May 98 November 106
June 96 December 108
If the firm is expecting total sales of k4, 200, 000 during 2005, estimate the sales for the individual month of 2005.
Answer by proyaop(69)   (Show Source):
You can put this solution on YOUR website! **1. Calculate Average Seasonal Index:**
* Sum of all seasonal indices: 106 + 105 + 101 + 104 + 98 + 96 + 93 + 89 + 92 + 102 + 106 + 108 = 1200
* Average seasonal index: 1200 / 12 = 100
**2. Calculate Average Monthly Sales:**
* Total annual sales: K4,200,000
* Average monthly sales: K4,200,000 / 12 = K350,000
**3. Estimate Sales for Each Month:**
* For each month, multiply the average monthly sales by its corresponding seasonal index and divide by the average seasonal index (100).
* **January:** K350,000 * (106/100) = K371,000
* **February:** K350,000 * (105/100) = K367,500
* **March:** K350,000 * (101/100) = K353,500
* **April:** K350,000 * (104/100) = K364,000
* **May:** K350,000 * (98/100) = K343,000
* **June:** K350,000 * (96/100) = K336,000
* **July:** K350,000 * (93/100) = K325,500
* **August:** K350,000 * (89/100) = K311,500
* **September:** K350,000 * (92/100) = K322,000
* **October:** K350,000 * (102/100) = K357,000
* **November:** K350,000 * (106/100) = K371,000
* **December:** K350,000 * (108/100) = K378,000
**Therefore, the estimated sales for each month of 2005 are as follows:**
* January: K371,000
* February: K367,500
* March: K353,500
* April: K364,000
* May: K343,000
* June: K336,000
* July: K325,500
* August: K311,500
* September: K322,000
* October: K357,000
* November: K371,000
* December: K378,000
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