Budgeting and Forecasting 278 Midterm 2014
TCO 1 The type of budget that is updated on a regular basis is known as a _____.
TCO 2) The quantitative forecasting method that uses actual sales from recent time periods to predict future sales, assuming each period has equal influence on the prediction of future sales, is the _____.
(TCO 3) Before performing linear regression, it is important to ensure that a linear relationship exists between the dependent and independent variables by plotting observed data on a diagram called the _____.
(TCO 4) Marketing costs include _____.
(TCO 5) Priority budgeting that ranks activities is known as _____.
(TCO 6) Which of the following is a disadvantage of the payback technique?
(TCO 1) Budgeting is a planning and control system. Discuss how budgeting contributes to these two functions of management.
(TCO 2) Budgeting and forecasting are both vital to a company- success. Compare and contrast these two elements.
TCO 2) The Federal Election Commission maintains data showing the voting age population, the number of registered voters, and the turnout for federal elections. The following table shows the national voter turnout as a percentage of the voting age population from 1972 to 1996 (The Wall Street Journal Almanac, 1998).
Voter Turnout
Year % Turnout Year % Turnout
1972 55 1986 36
1974 38 1988 50
1976 54 1990 37
1978 37 1992 55
1980 53 1994 39
1982 40 1996 49
1984 53
Part (a): Use exponential smoothing to forecast this time series. Consider smoothing constants of a = 0.1 and 0.2. What is the forecast of the percentage of turnout in 1998?
Part (b): Use the mean absolute deviation (MAD) to determine which smoothing constant provides the best forecast of voter turnout.
FOR WRITEN RESPONSES, PLEASE PARAPHRASE ASWERS AS THEY ARE INSTRUCTOR GUIDELINES.
(TCO 2) The Federal Election Commission maintains data showing the voting age population, the number of registered voters, and the turnout for federal elections. The following table shows the national voter turnout as a percentage of the voting age population from 1972 to 1996 (The Wall Street Journal Almanac, 1998).
Voter Turnout
Year % Turnout Year % Turnout
1972 55 1986 36
1974 38 1988 50
1976 54 1990 37
1978 37 1992 55
1980 53 1994 39
1982 40 1996 49
1984 53
Part (a): Use exponential smoothing to forecast this time series. Consider smoothing constants of a = 0.1 and 0.2. What is the forecast of the percentage of turnout in 1998?
Part (b): Use the mean absolute deviation (MAD) to determine which smoothing constant provides the best forecast of voter turnout.
Part (a): Using an Excel spreadsheet, the forecasted percentage of voter turnout in 1998 is 48.02% using a smoothing constant of 0.1 and 46.14% using a smoothing constant of 0.2.
Part (b) Using an Excel spreadsheet, the MAD for a smoothing constant of 0.1 is 7.11 and the MAD for a smoothing constant of 0.2 is 7.69. Therefore, the smoothing constant of 0.1 provides the best forecast of voter turnout.
FOR WRITEN RESPONSES, PLEASE PARAPHRASE ASWERS AS THEY ARE INSTRUCTOR GUIDELINES.
(TCO 3) Use the table “Food and Beverage Sales for Jimmy- Greek Restaurant†to answer the questions below.
Food and Beverage Sales for Jimmy- Greek Restaurant
($000s)
Month First Year Second Year
January 242 263
February 235 238
March 232 247
April 278 193
May 284 193
June 240 149
July 145 157
August 152 161
September 110 122
October 130 130
November 152 167
December 236 231
Part (a): Calculate the regression line and forecast sales for January of Year 3.
Part (b): Calculate the seasonal forecast of sales for January of Year 3.
Part (c): Which forecast do you think is most accurate and why?
USA 
India