A Tracking Signal Greater Than Zero and a Mean Absolute

question 7

Multiple Choice

A tracking signal greater than zero and a mean absolute deviation greater than zero imply that the forecast has:

• A) no bias and no variability of forecast error.
• B) a nonzero amount of bias and a nonzero amount of forecast error variability.
• C) no bias and a nonzero amount of forecast error variability.
• D) a nonzero amount of bias and no variability of forecast error.

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Definitions:

Contribution Margin Ratio

This ratio measures how much of a company's revenues will contribute to covering its fixed costs and generating profit, after variable costs have been paid.

Operating Income

Profit generated from normal business operations, calculated as sales minus cost of goods sold and operating expenses.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent or salaries.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, used to determine how sales affect profitability.