Theme 2.2 (evaluation)

Question 1

What are two advantages and two disadvantages of extrapolation?

Answer 1

1. A simple method of forecast
2. Quick and cheap
3. Assumes past data will carry on into the future
4. Unreliable if there are many fluctuations in data

Question 2

What are two advantages and two disadvantages of Break-even analysis?

Answer 2

1. Illustrates the importance of why a business should keep costs to a minimum
2. Helps management realise the risk of certain ideas