In forecasting PPE,which of the following gives the most accurate result if PPE must increase with units produced?

Question

Quizplus · Accepted Answer

The percentage of sales method is the best choice if PPE must increase with units produced because it is based on the assumption that as sales increase, so does the need for PPE to produce those sales. This method calculates the expected level of PPE as a percentage of projected sales, which makes it a more accurate estimate than the other options. The direct method and the more of the same method may be useful in other forecasting scenarios, but they do not take into account the relationship between production and PPE needs. The double-declining method is a depreciation method and not a forecasting method, so it is not relevant to this question.

In Forecasting PPE,which of the Following Gives the Most Accurate