In using the percentage of sales forecasting method the assumption is that
A)there is a direct relationship between long-term debt and sales
B)inventories will increase proportionately with sales
C)there is a direct relationship between notes payable and sales
D)retained earnings will increase proportionately with sales

Question

Quizplus · Accepted Answer

The percentage of sales forecasting method assumes that inventories will increase proportionately with sales. This is because as sales increase, more inventory is needed to meet customer demand. The other choices (A, C, and D) are not necessarily directly related to sales and therefore do not apply to this forecasting method.

In Using the Percentage of Sales Forecasting Method the Assumption