Forecast Error Will Be Caused By

question 15

Multiple Choice

Forecast error will be caused by:

• A) random variation from the average demand
• B) errors in forecasting average demand
• C) differences in lead times
• D) a and b above
• E) none of the above

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Definitions:

Fixed Overhead Budget Variance

The difference between actual fixed overhead costs and the budgeted or expected fixed overhead costs.

Volume Variance

A measure of the difference between the budgeted and actual volume of production, impacting costs.

Overhead Variances

The difference between actual overhead costs and the budgeted or standard overhead costs.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products or job orders, calculated before the costs are actually incurred.