As a Consultant, You Have Been Thinking About Choosing the "Right

question 33

Multiple Choice

As a consultant, you have been thinking about choosing the "right" alpha (smoothing constant) for forecasting using exponential smoothing.Which of the following is most accurate about alpha?

• A)If alpha is high, speed of reaction to changes in actually low.
• B)If a firm produces standard product with relatively stable demand, alpha should be small.
• C)Products experiencing growth should be assigned higher alpha value.
• D)Alpha could be more than 1.0, and in this case (1-alpha) will become negative to make up for it.
• E)B and C

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time due to use and wear and tear.

Accounting Principles

Rules and conventions that guide the accounting practices and financial reporting of businesses.

Group Method

A depreciation technique that treats a collection of assets as a single entity for depreciation purposes, often used for assets that are similar in nature and have approximately the same useful lives.

Record Keeping

The systematic process of organizing and maintaining documents, records, and information to ensure accuracy, accessibility, and compliance.