When the Underlying Mean of a Time Series Is Very

question 9

Multiple Choice

When the underlying mean of a time series is very stable and there are no trend, cyclical, or seasonal influences:

• A) a simple moving-average forecast with n = 20 should outperform a simple moving-average forecast with n = 3.
• B) a simple moving-average forecast with n = 3 should outperform a simple moving-average forecast with n = 15.
• C) a simple moving-average forecast with n = 20 should perform about the same as a simple moving-average forecast with n = 3.
• D) an exponential smoothing forecast with a = 0.30 should outperform a simple moving-average forecast with α = 0.01.

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Definitions:

Expected Annual Operating Activity

The projected level of operations, including production and sales, anticipated for a company over a year.

Common Activity Base

A measure used in activity-based costing for allocating overhead and indirect costs to products or services based on relevant activities.

Job Cost Sheet

A document that records the materials, labor, and manufacturing overhead costs assigned to an individual job or project.

Cost Accounting

A branch of accounting focused on capturing a company's total cost of production by assessing its variable and fixed costs.