Use the Data Set Below (Data Set E3)to Answer the Questions

question 25

Essay

Use the data set below (Data Set E3)to answer the questions that follow.
Data Set E3
$$\begin{array} { c c } \text { Peridd } & \text { Sales Volume }\\1 & 1000 \\2 & 1200 \\3 & 1450 \\4 & 1750 \\5 & 2200\\6&1750\end{array}$$
a.Find the four-period simple moving average forecasts for Periods 5 and 6.
b.Find the four-period weighted moving average forecasts for Periods 5 and 6 using weights of 0.05,0.15,0.30,and 0.50 from the earliest period to the latest period,respectively.
c.Which set of forecasts is more accurate,the simple moving average forecasts or the weighted moving average forecasts? Why is that set of forecasts more accurate in this particular case (using Data Set E3)?
d.Will that type of forecast always be more accurate? Why or why not?

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Definitions:

Degree of Operating Leverage

A metric that measures a company's sensitivity of operating income to its sales, indicating the impact of fixed and variable costs.

Contribution Format Income Statement

An income statement that separates fixed and variable costs to highlight the contribution margin.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in its revenues, indicating the proportion of fixed costs in the company's cost structure.

Contribution Format Income Statement

An income statement format that separates fixed costs from variable costs, thus showing the contribution margin.