Question
Completed table for Sales forecast for 2023-2027 provided below. Explanation/calculations for numbers given below the table. Sales 2023 2024 2025 2026 2027 Forecast SALES $1,800,000
Completed table for Sales forecast for 2023-2027 provided below. Explanation/calculations for numbers given below the table.
Sales | 2023 | 2024 | 2025 | 2026 | 2027 |
Forecast SALES | $1,800,000 | $1,815,000 | $1,812,000 | $1,812,600 | $1,812,480 |
Since a two-year weighted annual forecast is needed, we use the weights, W1 = 0.2 and W2 = 0.8. W2 is applied to the most recent previous year sales and W1 is applied to two years' previous sales. Therefore, Forecast Sales 2023 = W2*Actual Sales 2022 + W1*Actual Sales 2021 = 0.8*1875000 + 0.2*1500000 = $1,800,000 From 2024 onwards, previous year actual sales are not always available, in which case, actual sales are replaced by forecast sales. Therefore, Forecast Sales 2024 = W2*Forecast Sales 2023 + W1*Actual Sales 2022 = 0.8*1800000 + 0.2*1875000 = $1,815,000 Forecast Sales 2025 = W2*Forecast Sales 2024 + W1*Forecast Sales 2023 = 0.8*1815000 + 0.2*1800000 = $1,812,000 Forecast Sales 2026 = W2*Forecast Sales 2025 + W1*Forecast Sales 2024 = 0.8*1812000 + 0.2*1815000 = $1,812,600 Forecast Sales 2027 = W2*Forecast Sales 2026 + W1*Forecast Sales 2025 = 0.8*1812600 + 0.2*1812000 = $1,812,480
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