I Using the Ratio-To-Moving-Average Method, Dividing the Actual Sales for a Month

question 63

Multiple Choice

i. Using the ratio-to-moving-average method, dividing the actual sales for a month by the typical seasonal for that month results in a figure that includes only trend, cycle and irregular fluctuations. This procedure is called deseasonalizing the sales.
Ii) The reason for deseasonalizing a sales series is to remove trend and cyclical fluctuations so that we can study seasonal fluctuations.
Iii) Knowing the seasonal pattern in the form of indexes allows the retailer to deseasonalize sales.

• A) (i), (ii) and (iii) are all correct statements
• B) (i) and (ii) are correct statements, but not (iii).
• C) (i) and (iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) All statements are incorrect.

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Definitions:

Support Department Costs

Expenses incurred by service departments that do not directly produce goods but support other departments that do.

Total Janitorial Costs

The complete expenses associated with cleaning and maintaining a facility.

Market Value

The current price at which an asset or service can be bought or sold in the open market, subject to supply and demand.

Reciprocal Services Method

A method used in cost accounting to allocate costs between interdependent departments, acknowledging mutual services they provide to each other.