Lesson 1 Sept C2 Revision

Which is NOT a qualitative method of sales forecasting?

• Expert opinion

• Delphi technique

• Time series and extrapolation

• Intuition

A business has outcomes against budget as in the attached image. Which statement is true?

• The only adverse variance is for cost of sales

• The only favourable variance is for sales revenue

• The expenses and profit variances are adverse

• The sales revenue and profit variances are favourable

Which two reasons together explain why the cost of sales variance is adverse?

• The sales variance is favourable and average prices are higher

• The sale variance is favourable and the gross margin is higher than budget

• The sales variance is adverse and the gross margin is lower than budget

• The sale variance is favourable and the gross margin is lower than budget

Demand for business's products with a YED coefficient of 1.5 is

A business has a YED coefficient of 0.8, which is the correct interpretation of demand for this business's products?

• Demand is income inelastic, and the product is a normal good

• Demand is income inelastic and the product is an inferior good

• Demand is income elastic and the product is a normal good

• Demand is income elastic and the product is an inferior good

These types of sales forecasting techniques may be better in providing non-biased and substantiated sales forecasts:

A business has the following data for the prices of its raw materials per unit: 2020 - £5.40 per unit; 2021 - £5.70 per unit and 2022 - £6.20 per unit. It wishes to index the data. If 2020 is the base year, what shall be the indices for 2021 and 2022?

• 2021 105.6

  2022 108.8

• 2021 100.3

  2022 101.2

• 2021 105.6

  2022 114.8

• 2021 100.3

  2022 108.8

A business sees it sales increase by 5% following a price reduction of 10%. What is the PED and how would it be interpreted?

• 0.5 and demand is price inelastic

• -0.5 and demand is price inelastic

• 2 and demand is price elastic

• -2 and demand is price inelastic

A business has an adverse sales variance and an adverse cost of sales variance. What might be a sensible response to these variances?

• Reduce expenditure on promotions

• Switch to a lower quality of materials to reduce cost of sales

• Increase selling prices

• Take more advantage of prompt payment discounts from suppliers

A business has a PED coefficient of -0.6, and demand falls from 1,000 units to 800 units following a price change. What is the likely price change?

• £5 per unit to £6.65

• £5 to £5.60

• £5 to £3.35

• £5 to £4.40