The budgeting method which allocates funds to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold is referred to as _________.

Question

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The budgeting method that allocates funds to promotion as a percentage of past or anticipated sales is referred to as the percentage of sales method. This method is based on the assumption that there is a direct relationship between the level of promotion spending and the level of sales. This method is simple to use and provides a quick and easy way to determine the amount of money that should be allocated to promotion. However, it does not take into account the effectiveness of past promotions and may not be appropriate for new products or markets.

The Budgeting Method Which Allocates Funds to Promotion as a Percentage