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Texas State Sales Tax Forecasting

In: Business and Management

Submitted By iraqitheboss
Words 584
Pages 3
MBA 643-17
April - May 2015
Problem-Solving Skills Assignment One
Texas State sales Tax Forecasting
Due Date May 22, 2015

A major source of revenue in Texas is a state sales tax on certain types of goods and services. Data are compiled and the state controller uses them to project future revenues for the state budget. One particular category of goods is classified as Retail Trade. Four years of quarterly data (in millions) for one particular area of southeast Texas follows. Quarter | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | 1 | 218 | 225 | 234 | 250 | 2 | 247 | 254 | 265 | 283 | 3 | 245 | 255 | 264 | 289 | 4 | 292 | 299 | 327 | 356 |

1. Compute seasonal indices for each quarter for year 5 based on CMA.
Seasonal indices can be calculated using this formula:
(sum of average value for Qx divided by number of data).
Therefore seasonal indices for quarters in year five will be:
Q1 = (88.148 + 88.51 + 87.98)/3 = 88.21%
Q2 = (98.68 + 98.51 + 97.29)/3 = 98.16%
Q3 = (97.46 + 98.31 + 96.17)/3 = 97.31%
Q4 = (115.35 + 114.17 + 117.30)/3 = 115.6%

2. Deseasonalize the data and develop a trend line of the deseasonalized data.

Quarter | Sales | Index | Deseasonalised data | 1 | 218 | 0.8821 | 247.1 | 2 | 247 | 0.9816 | 251.6 | 3 | 245 | 0.9716 | 252.2 | 4 | 292 | 1.1561 | 252.6 | 5 | 225 | 0.8821 | 255.1 | 6 | 254 | 0.9816 | 258.8 | 7 | 255 | 0.9716 | 262.5 | 8 | 299 | 1.1561 | 258.6 | 9 | 234 | 0.8821 | 265.3 | 10 | 265 | 0.9816 | 270.0 | 11 | 264 | 0.9716 | 271.7 | 12 | 327 | 1.1561 | 282.8 | 13 | 250 | 0.8821 | 283.4 | 14 | 283 | 0.9816 | 288.3 | 15 | 289 | 0.9716 | 297.4 | 16 | 356 | 1.1561 | 307.9 |

Regression model y = 238.21 + 3.631 (X)
X: number of periods
Y : deseasonalized data

3. Use the trend line to forecast the sales for each quarter of year 5.
Using Regression line “y = 238.21 + 3.631

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