# Two Accounting Questions

**Question description**

1. The following table reports the Consumer Price Index for the Los Angeles area on a monthly basis from January 1998 to December 2000 (base year = 1982–1984). Eliminating the data for 2000, use Excel to forecast the index for all of 2000 using a three- and six-month average. Which provides a better forecast for 2000 using the data provided?

3. Forecast the data for 2000 again in Problem 1 with exponential smoothing with w = 0.3 and w = 0.7. Is this a better forecast than the moving average? Note: For appendix problem 3, please compare RMSEs for moving average and exponential smoothing forecasts to answer “Is this a better forecast than the moving average?”

Note:

- Appendix problem 1: Delete “Eliminating the data for 2000.” You need to calculate the moving average forecasts and RMSEs for year 2000, not the whole data period.

2.
Appendix problem 3: Compare **RMSEs** for moving average and exponential forecasts to answer “Is
this a better forecast than the moving average?” (see also p. 237). Use 166.63,
the mean of all 36 months, as the initial forecast for Jan. 1998 for both
exponential smoothing forecasts.

Questions_for_Critical_Thinking_3_Chapter_6_Spreadsheet_1.xlsx

## Tutor Answer

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors