Module #5
Trend
At the end of this unit, students will be able to:
1. Identify Trend Projections
2. Calculate Trend
5.1 IDENTIFY AND CALCULATE TRENDS
A TREND is a pattern in data that indicates what may happen to a company’s future sales,
income, expenses etc. It is important to be able to recognize trends in order to detect
problems and make sound planning decisions for the future.
A TREND indicates the rate at which an amount is increasing or decreasing.
Step 1: RoC = (NB – OB) / OB
Step 2: NB = OB x (100 +/- RoC)
EXAMPLE
a. The cost of a personal computer increased from $1,500 in April to $1,800 in May. What
was the percent increase?
SOLUTION
NB = $1,800
OB = $1,500
FORMULA: RoC = (NB – OB) / OB
= (1,800 - 1,500) / 1,500
= 300/1,500 x 100
Roc = 20%
b. If this trend continues, what will be the price of the computer in June?
SOLUTION
The TREND is that the computer price increased by 20% over the PREVIOUS MONTH of
April. If this trend continues, then the price in June will be 20% higher than the
PREVIOUS MONTH, that would be month of May.
REMINDER!
When calculating a TREND, always calculate as a % of the OLD BASE
.
OB = $1,800
ROC = 20%
NB = OB x (100%+RoC)
= OB x (100%+20%)
= 1,800 x 1.20
NB = $2,160
1
BUSINESS PROBLEMS
TRAVELS PUBLISHING COMPANY
European Series
TITLE January February March
Inside France 6,000 7,500
Inside Germany 8,000 7,360
Inside Italy 5,500 4,600
You have been asked to identify the trends in sales in order to estimate what the sales
will be for the month of March for each of the above travel books.
a. Calculate the rate of change in sales for Inside France from January to
February.
FORMULA: RoC = (NEW BASE – OLD
BASE)/OLD BASE NB = 7,500 OB = 6,000
= (7500 – 6000) / 6000
= 1,500 / 6000
= 0.25 x 100
RoC = 25%
b. What is the trend in sales for Inside France?
The trend in sales is an increase of 25%
c. Use this trend to calculate estimated sales for March.
OB = 7,500 (**the NB from portion above is now the OB)
RoC = 25%
Trend (New new base) = OB x (100%+/-RoC)
= OB x (100%+25%)
= 7500 x 1.25
NB = 9,375
Therefore, the projected sales for March would be 9,375
2
Inside Germany
Step 1: Calculate the rate of change from January to February.
Step 2: Use this rate to forecast sales for March. Round to the whole number.
Inside Italy
Step 1: Calculate the rate of change from January to February.
Step 2: Use this rate to forecast sales for March. Round it to the whole number.
3
Practice Exercises
1. In January The New Yorker sold 18,879 copies; in February they sold 22,548 copies. If this
trend continues, how many copies will they sell in March? Round Step 2 to nearest whole
number.
2. In their 1st quarter, Cupcake Queens sold $59,784 worth of vanilla cupcakes, in their 2nd
quarter they sold $63,146. If this trend continues, how much will they make in their 3rd
quarter? (2dps)
3. Last year, Buff Bods Fitness Centre had 298 clients registered, this year they experienced a
decrease and only have 205. If this trend continues, how many people will be registered next
year? Remember, final answer to be rounded to whole number when it comes to people.
