Which of the Following Depicts a Common Top-Down Approach to Forecasting

question 46

Multiple Choice

Which of the following depicts a common top-down approach to forecasting?

• A) Begin with a company's sales forecast for a specific market segment, then draw national and industry sales forecasts.
• B) Start with an industry forecast, then apply it to a specific company and its products, and subsequently draw a national income forecast.
• C) Start by developing a national income forecast; then use it to develop an industry sales forecast; then use it to develop forecasts for a specific company, its specific products, and the segments it targets.
• D) Start by developing a national income forecast, then develop a forecast for a specific company, which should lead to an industry sales forecast.
• E) None of the above.

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Definitions:

Periodic Inventory System

A periodic inventory system is a method of inventory valuation in which inventory is physically counted at the end of a specific period to determine the cost of goods sold and ending inventory.

Average Cost Method

An inventory costing method wherein the cost of goods sold and remaining inventory is valued at the average cost of all inventory items purchased during a period.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated either by a physical count or accounting estimation methods.

Perpetual Inventory System

An accounting system that continuously updates inventory records for each purchase and sale.