Knollwood Industries uses exponential smoothing to forecast collections of outstanding
accounts receivable. The company’s credit sales are relatively steady with little seasonal
fluctuation, and the use of exponential smoothing has proven to be 90% accurate.
Collections last month were forecasted to be $525,000, but actual collections were
$485,000. Using a smoothing constant of 0.25, Knollwood’s collections for next month are
projected to be