Budgeting for marketing expenses by computing a percentage of forecasted sales:
A) is especially suitable for new products.
B) always results in increased expenditure levels from year to year.
C) is very complicated-and thus this method is not used very often.
D) may lead to a drop in marketing expenses at a time when the firm wants to maintain or expand sales.
E) tends to result in large changes in marketing expenses from year to year.

Question

Quizplus · Accepted Answer

Budgeting for marketing expenses by computing a percentage of forecasted sales may lead to a drop in marketing expenses at a time when the firm wants to maintain or expand sales. This is because if sales are forecasted to decrease, the marketing budget would also decrease, which could further affect sales negatively. Additionally, if sales are forecasted to increase, the marketing budget would increase, but this may not necessarily be the best decision for the overall growth and success of the firm.

Budgeting for Marketing Expenses by Computing a Percentage of Forecasted