Describe How Accurate Forecasting Can Benefit a Firm

question 96

Essay

Describe how accurate forecasting can benefit a firm. Provide several hypothetical benefits that a coffee shop might experience by improving its demand forecasting.

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Definitions:

Absorption Costing

An accounting method that includes both variable and fixed manufacturing costs in the cost of a product.

Net Operating Income

The profit realized from a business's operations after subtracting operating expenses but before deducting taxes and interest.

Variable Costing

A cost accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs and treats fixed manufacturing overhead as a period expense.

Net Operating Income

The profit a company makes after deducting operating expenses but before interest and taxes from its total revenue.