CAT Financial Planning & Forecasting 2

Question 1

A company's sales last year were $500,000. Using a 12% growth rate, what is the projected sales figure for next year?

Accepted Answer

$560,000

Answer

$500,000 × 1.12 = $560,000.

Question 2

Which forecasting method uses the average of all historical data points, giving equal weight to each period?

Accepted Answer

Simple moving average

Answer

A simple moving average assigns equal weight to each period included in the average.

Question 3

In a cash flow forecast, which of the following is classified as a capital expenditure outflow?

Accepted Answer

Purchase of new machinery

Answer

Capital expenditures are long-term asset purchases such as machinery, not day-to-day operating costs.

Question 4

A master budget is best described as:

Accepted Answer

A comprehensive set of budgets covering all aspects of a business

Answer

The master budget consolidates all sub-budgets (sales, production, cash, etc.) into one integrated plan.

Question 5

If fixed costs are $80,000 and the contribution margin ratio is 40%, what sales revenue is required to break even?

Accepted Answer

$200,000

Answer

Break-even sales = Fixed costs ÷ CM ratio = $80,000 ÷ 0.40 = $200,000.

(CAT) Certified Accounting Technician Practice Test