The owner of a cosmetics startup told his employees We had a

The owner of a cosmetics start-up told his employees, “We had a good year, and next year looks to be even better. I’m going to raise this year’s promotion budget by 4.5 percent compared to last year’s. We had strong growth in sales of close to 10 percent this year so I think we can do more advertising.” This company is most likely using __________ budgeting. Multiple Choice percentage of sales competitive parity all-you-can-afford objective and task linear forecast

Solution

Correct Answer:

A. percentage of sales

In this method of budgeting, a particular percentage of the sales revenue, is allocated to the advertising budget. So, it is termed as percentage of sales budgeting.