A Six-Month Moving Average Forecast Is Generally Better Than a Three-Month

question 50

Multiple Choice

A six-month moving average forecast is generally better than a three-month moving average forecast if demand:

• A) is rather stable.
• B) has been changing due to recent promotional efforts.
• C) follows a downward trend.
• D) exceeds one million units per year.
• E) follows an upward trend.

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Definitions:

Direct Labour

The cost of wages for workers directly involved in the manufacture of products or the delivery of services.

Fixed Manufacturing Overhead

Indirect manufacturing costs that remain constant regardless of the level of production, such as factory rent and salaries of permanent staff.

Variable Manufacturing Overhead

Variable manufacturing overhead includes all production costs that change with the level of production output and are not direct materials or direct labor, such as utilities for the manufacturing facility.

Direct Labour

The wages paid to workers directly involved in the production of goods or services, considered a variable cost.