Table 1.12 shows a city’s miscellaneous revenues for the last ten years. An investigation reveals that the drastic increase from Year 5 to Year 6 was due to a new reclassification of the city’s “fines and forfeitures.” About 20 percent of the miscellaneous revenue was not included before Year 6. Before forecast, the finance director told you that he would rather underestimate than overestimate this revenue, as overestimation leaves the city no room for spending flexibility.

The director even suggested that he would take 95 percent your forecast. What is your strategy to deal with this forecasting conservatism? What is your forecast of the city’s miscellaneous revenues for the next year?

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Table 1.12 Miscellaneous Revenues Year Revenues ($) 1 234567890 10 4,250,656 5,138,322 5,188,121 4,555,235 5,151,239 8,968,142 10,742,718 8,249,782 10,783,255 7,556,219