In the Exponential Smoothing Formula for Updating the Level of the Series

question 57

Multiple Choice

In the exponential smoothing formula for updating the level of the series, ,what does α represent?

• A)The weighted average of the exponentially declining weights.
• B)The speed of decline in the weights of older observations.
• C)The initial value of the time series.
• D)The last value of the time series.

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Definitions:

Contribution Margin Ratio

A financial metric that measures the proportion of revenue that exceeds variable costs, indicating how much of sales revenue is available to cover fixed costs and generate profit.

Fixed Costs

Costs that remain constant regardless of the amount of output or the level of business operations, including expenses like rent, wages, and insurance fees.

Rent Expense

The cost incurred from renting property or equipment for business or personal use, recognized as an expense on the income statement.

Margin of Safety

The difference between actual sales and the break-even point, used as a buffer against unpredictability in business performance.