Predict the sales for 2020 using the moving average method. You noticed a sudden jump in sales for 2016. After inquiring about this jump, you were notified by your manager about a one-time special order sale for $60,000 in that year that is not likely to be repeated. What revision, if any, would you make in the sales information used for projection?
Predict the sales for 2020 using the moving average method. You noticed a sudden jump in sales for 2016. After inquiring about this jump, you were notified by your manager about a one-time special order sale for $60,000 in that year that is not likely to be repeated. What revision, if any, would you make in the sales information used for projection?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The Simpson Corporation has gathered information regarding past sales of custom t-shirts.
| Year | Sales |
|---|---|
| 2013 | $225,000 |
| 2014 | $193,000 |
| 2015 | $248,000 |
| 2016 | $360,000 |
| 2017 | $340,000 |
| 2018 | $295,000 |
| 2019 | $310,000 |
Answer the following questions.
- Predict the sales for 2020 using the moving average method.
- You noticed a sudden jump in sales for 2016. After inquiring about this jump, you were notified by your manager about a one-time special order sale for $60,000 in that year that is not likely to be repeated. What revision, if any, would you make in the sales information used for projection?
- If you revised your historical sales to be used to project 2020 sales, please recalculate your projection using the moving average method.
- Which projection (Question 1 or Question 3) do you feel is more representative of the Simpson Corporation's historical sales? Why?
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