The Reliability of a Short-Term Cash Forecast Depends Most Heavily

question 57

Multiple Choice

The reliability of a short-term cash forecast depends most heavily on the quality of:

• A) Cost of goods sold forecast
• B) Current ratio forecast
• C) Sales forecast
• D) Shares outstanding forecast

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Definitions:

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor.

Fixed Costs

Costs that do not change with the amount of goods or services produced, such as rent, salaries, and insurance.

Break-Even Point

The point at which total costs and total revenue are equal, resulting in no net gain or loss.

Variable Cost

A cost that changes in proportion to the level of output or activity.