A Company Is Preparing Its Annual Budget and Is Estimating

question 25

Multiple Choice

A company is preparing its annual budget and is estimating the number of units of Product A that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship: y = a + bx where y = number of sales units in the quarter a = 10,000 units b = 3,000 units x = the quarter number where 1 = quarter 1 of year 1 Actual sales of Product A in Year 1 were affected by seasonal variations and were as follows: Quarter 1:14,000 units Quarter2: 18,000 units Quarter 3: 18,000 units Quarter 4: 20,000 units Calculate the expected sales of Product A (in units) for each quarter of year 2, after adjusting for seasonal variations using the additive model.

• A) The expected sales for year 2 Quarter 4 was 32700 units
• B) The expected sales for year 2 Quarter 4 was 32000 units
• C) The expected sales for year 2 Quarter 4 was 33000 units
• D) The expected sales for year 2 Quarter 4 was 40000 units

---

Definitions:

Slope

A measure of the steepness or inclination of a line, indicating the change in the vertical axis relative to the change in the horizontal axis.

Consumer

A consumer is an individual or group who purchases goods and services for personal use from the market, contributing to demand.

Budget Constraints

The limitations on the consumption bundles that a consumer can afford with a limited income.

Indifference Curves

Graphical representations used in economics to show combinations of two goods that give a consumer equal satisfaction and utility, illustrating their preferences.