AgriGrow, Inc

question 125

Multiple Choice

AgriGrow, Inc. is an agricultural research firm that develops and markets seeds for fast-growth crops. This product-market is in the growth stage of the product life cycle--and sales depend not only on the right marketing mix but also on a variety of other concerns such as competitors' new products, the weather, and ever-changing Federal farm subsidy programs. The AgriGrow marketing manager wants to develop a sales forecast, and in this situation

• A) trend extension approaches are likely to yield the most accurate forecast.
• B) NAICS codes can be used as factors.
• C) the Survey of Buying Power (and the buying power index) should work well.
• D) a jury of executive opinion is probably the best bet.
• E) none of the above.

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Definitions:

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead costs to products, calculated before the period begins.

Machine-Hours

A measurement of the amount of time machines are in operation, used to allocate machine-related costs to products.

Fixed Manufacturing Overhead Cost

Expenses related to manufacturing that do not change with the level of production, such as rent, salaries, and depreciation on equipment.

Variable Manufacturing Overhead

These are costs that vary with production volume, such as utilities for the manufacturing plant, but cannot be directly traced to specific units of product.