Toward the end of the fiscal year,the owner of a small company came back from lunch concerned because he had learned that a business targeting the same customers as his was planning on spending $150,000 on promotion.As soon as he arrived at the office,he called his financial manager and said,"I want to budget $150,000 for next year's promotion." Which method of promotional budgeting did the owner want to use?
A)the competitive- parity method
B)the percentage- of- sales method
C)the pull- push method
D)the objective- and- task method
E)the bottom- up method

Question

Quizplus · Accepted Answer

The owner wanted to use the competitive-parity method, which involves setting the budget based on what competitors are spending. The fact that he specifically referenced a competitor's spending shows that he is using this method. The percentage-of-sales method involves setting the budget as a percentage of previous sales, the pull-push method involves focusing on either creating demand or fulfilling demand, the objective-and-task method involves setting the budget based on specific objectives and tasks to achieve those objectives, and the bottom-up method involves compiling individual department budgets to create an overall promotional budget. None of these methods are indicated in the scenario, other than the competitive-parity method.

Toward the End of the Fiscal Year,the Owner of a Small