The _____ method of budgeting is being employed when expenditures are allocated based on information about industry averages for advertising.The budget is set to maintain a level consistent with industry spending.
A)arbitrary allocation
B)percentage of sales
C)objective and task
D)return on investment
E)competitive parity

Question

Quizplus · Accepted Answer

The method described in the scenario is known as competitive parity. This approach involves setting the advertising budget based on how much competitors are spending. The goal is to maintain a similar level of advertising spend as industry competitors in order to remain competitive. This method is often used by companies that want to maintain their market position without spending more than necessary on advertising.

The _____ Method of Budgeting Is Being Employed When Expenditures