Increasing the Number of Periods in a Simple Moving Average

question 143

True/False

Increasing the number of periods in a simple moving average forecast causes the forecasting technique to be less responsive to changes in the historical data.

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Definitions:

Variable Costs

Costs that change directly and proportionately with the level of production or business activity.

Break-even Point

The level of sales at which total revenues equal total costs, resulting in no profit or loss.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and insurance.

Margin of Safety

The difference between actual sales and the break-even point, which measures the cushion that a business has to withstand a sales downturn.