The percent of sales method of forecasting assumes that fixed assets vary proportionately with sales.

Question

The percent of sales method of forecasting assumes that fixed assets vary proportionately with sales.​

Quizplus · Accepted Answer

The percent of sales method of forecasting primarily assumes that certain balance sheet and income statement accounts, like accounts receivable, inventory, and direct costs, vary directly with sales. Fixed assets, however, do not necessarily change proportionately with sales since they are not directly tied to the volume of sales in the short term.

The Percent of Sales Method of Forecasting Assumes That Fixed