The Owner of Darkest Tans Unlimited in a Local Mall

question 91

Multiple Choice

The owner of Darkest Tans Unlimited in a local mall is forecasting this month's (October's) demand for the one new tanning booth based on the following historical data: $$\begin{array} { l l } \text { Month } & \text { Number of Visits } \\\hline \text { April } & 100 \\\text { May } & 140 \\\text { June } & 110 \\\text { July } & 150 \\\text { August } & 120 \\\text { September } & 160\end{array}$$ What is this month's forecast using the naive approach?

• A) 100
• B) 160
• C) 130
• D) 140
• E) 120

Identify and calculate direct labor and materials cost variances, and understand their impacts on financial performance.

Distinguish between favorable and unfavorable variances and their implications for managerial decisions and financial control.

Analyze the role of flexible budgets in adapting to changes in production levels and its effect on variances.

Understand the process of preparing different types of budgets (static, flexible, and variable) and their relevance in financial planning.

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Definitions:

Rate of Return

The percentage gain or loss on an investment over a specified period, expressing the compound annual growth rate.

Initial Margin

The minimum amount of equity required to initiate a position in the securities market, often expressed as a percentage of the total investment.

Sell the Stock

The action of disposing of shares in a company.

Margin Call

A demand by a broker for an investor to deposit additional money or securities to cover possible losses.