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Free IIA IIA-CIA-Part3 Exam Braindumps (page: 17)

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1555 Questions & Answers
Page 17 of 390

To remove the effect of seasonal variation from a time series, original data should be:

  1. Increased by the seasonal factor.
  2. Reduced by the seasonal factor.
  3. Multi plied by the seasonal factor.
  4. Divided by the seasonal factor.

Answer(s): D

Explanation:

Seasonal variations are common in many businesses. To remove the effect of seasonal variation from a time series, the original data (with the four trends) is divided by the seasonal norm.



The moving-average method of forecasting:

  1. Is a cross-sectional forecasting method.
  2. Regresses the variable of interest on a related variable to develop a forecast.
  3. Derives final forecasts by adjusting the initial forecast based on the smoothing constant.
  4. Includes each new observation in the average as it becomes available and discards the oldest observation.

Answer(s): D

Explanation:

The simple moving-average method is a smoothing technique that uses the experience of the past N periods (through time period t) to forecast a value for the next period. Thus, the average includes each new observation and discards the oldest observation. The forecast formula for the next period (for time period t+1) is the sum of the last N observations divided by N.



A company is formulating its plans for the coming year, including the preparation of its cash budget. Historically. 30% of the company's sales are cash sales. The remaining 70% are credit sales with the following collection pattern:



For the month of April, the total cash receipts from sales and collections on account would be:

  1. US$3,729,968
  2. US$3,781,600
  3. US$4,025,200
  4. US$4,408,000

Answer(s): B

Explanation:

The cash receipts for April equal April's cash sales (US $4,000,000 * 30% = US $1.200, 000), 40% of April's credit sales, and 58% of March's credit sales. Consequently, total cash receipts equal US $3,781,600 [$1,200,000 + ($4,000,000 * 40% x 70%) + ($3,600,000 x 58% x 70%)].



A learning curve of 80% assumes that the incremental unit time is reduced by 20% for each doubling of output. Also, direct labor cost is proportionate to time worked.
What is the incremental direct labor cost of the 16th unit produced as an approximate percentage of the first unit produced?

  1. 41%
  2. 31%
  3. 51%
  4. 64%

Answer(s): A

Explanation:

The assumption is that the incremental unit time (time to produce the last unit) is reduced by 20% when production doubles. Thus, the labor cost of the sixteenth unit is 40.96% of that for the first unit (100% x 80% x 80% x 80% x 80%).






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