The Method of Forecasting with Leading Indicators Can Be Criticized

question 70

Multiple Choice

The method of forecasting with leading indicators can be criticized for

• A)occasionally forecasting a recession when none ensues.
• B)forecasting the direction of the economy but not the size of the change in economic activity.
• C)frequent revisions of data after original publication.
• D)All of the above

---

Definitions:

Fixed Overhead Budget Variance

The difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs.

Actual Fixed Overhead Costs

Actual fixed overhead costs are the incurred expenses that do not vary with the level of production or sales, such as rent and salary of permanent staff.

Budgeted Fixed Manufacturing Overhead

The estimated total fixed costs required for the manufacturing process, planned in advance for a specific period.

Materials Price Variance

The difference between the actual cost of materials used in production and the budgeted or standard cost, indicating how effectively a company controls its material costs.