Fed Up with Her Working Conditions at the Call Center

question 19

Multiple Choice

Fed up with her working conditions at the call center, Lisa decides to invest in a state-of-the-art sewing machine and produce limited quantities of her own clothing designs. After a few months of operation, she decides to apply some of the forecasting techniques she mastered in school. Which of these statements about her forecasts is correct?

• A)Her forecasts will probably be 100% accurate.
• B)Her demand forecasts for a year from now will probably be more accurate than her demand forecasts for three months from now.
• C)Her demand forecasts for each style of skirt will be more accurate than her demand forecasts for all skirts.
• D)The best way for her to determine the amount of fabric she needs is to forecast it based on her customer orders for each type of skirt.

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Definitions:

Accounting Depreciation

Accounting depreciation is the systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.

After-Tax Consequences

The financial results of an event or transaction taking into account the effects of taxes.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of a business.

Discounted Cash Flow

A valuation method used to estimate the attractiveness of an investment opportunity by calculating the present value of expected future cash flows.