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Scenario 5.1 Use the Following to Answer the Questions

question 50

Multiple Choice

Scenario 5.1
Use the following to answer the questions.
Lil' Angels Kids Spa offers various treatments designed to appeal to the younger customers. Treatment options include manicures, pedicures, facials, tea parties, and dress up photos. Parents can even purchase a birthday party package. Currently, Lil' Angels offers its services only to girls under the age of 14. Originally begun in Delaware, Lil' Angels is considering opening its spa/salons in other parts of the country and is planning to expand its offerings to girls aged 14 to 17. The company realizes that some changes may be needed. For example, the management wants to find out if the older girls will be interested in their birthday party and tea party services.
-Refer to Scenario 5.1. In calculating the sales forecast for the next year, marketers at Lil' Angels use data from the past five years in order to identify any trends that surface. Additionally, marketers want to find out what family variables relate to those sales. Which of the following variables should the marketers use in relating to sales? What type of forecast method will they implement to relate the variables to sales trends?

Definitions:

Cost-Volume-Profit Analysis

An accounting technique used to determine how changes in costs and volume affect a company's operating income and net income.

Absorption Costing

A method of accounting that incorporates all costs associated with manufacturing, such as direct materials, direct labor, and both variable and fixed overhead, into a product's price.

Internal Management

The process and practice of effectively running an organisation by its own executives and staff, focusing on policies, strategies, and resource allocation.

External Reporting

The process of preparing and disclosing financial statements and other reports to stakeholders outside the organization.