A Company Wants to Generate a Forecast for Unit Demand

question 94

Multiple Choice

A company wants to generate a forecast for unit demand for year 2020 using exponential smoothing. The actual demand in year 2019 was 120. The forecast demand in year 2019 was 110. Using these data and a smoothing constant alpha of 0.1, which of the following is the resulting year 2020 forecast value?

• A) 100
• B) 110
• C) 111
• D) 114
• E) 120

---

Definitions:

Variable Overhead

Costs that fluctuate with production output levels, such as utilities or indirect materials, but are not directly tied to specific units produced.

Variable Overhead Rate Variance

The difference between the actual variable overhead costs and the standard variable overhead costs allocated based on a predetermined rate.

Indirect Labor

The wages paid to employees who are not directly involved in producing goods but support those who are, such as maintenance workers and supervisors.

Power

The capacity or ability to direct or influence the behavior of others or the course of events.