Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the average approach?
$$\begin{array} { c c c c c c }
\text { Year } & 2013 & 2014 & 2015 & 2016 & 2017 \
\text { Sales } & \$ 1,000,000 & \$ 2,000,000 & \$ 1,700,000 & \$ 1,800,000 & \$ 2,200,000
\end{array}$$
A) $1,000,000
B) $1,740,000
C) $1,925,000
D) $2,200,000

Question

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the average approach?
$$\begin{array} { c c c c c c } 
\text { Year } & 2013 & 2014 & 2015 & 2016 & 2017 \
\text { Sales } & \$ 1,000,000 & \$ 2,000,000 & \$ 1,700,000 & \$ 1,800,000 & \$ 2,200,000
\end{array}$$
A) $1,000,000
B) $1,740,000
C) $1,925,000
D) $2,200,000

Quizplus · Accepted Answer

To forecast next year's sales using the average approach, you add up all the sales figures and divide by the number of years. The total sales from 2013 to 2017 are $1,000,000 + $2,000,000 + $1,700,000 + $1,800,000 + $2,200,000 = $8,700,000. Dividing this total by 5 years gives $8,700,000 / 5 = $1,740,000.

Suppose a Firm Has Had the Historical Sales Figures Shown