Budgeting for Promotion Expenditures by Computing a Percentage of Past

question 55

Multiple Choice

Budgeting for promotion expenditures by computing a percentage of past or expected sales

• A)is the most common method of setting the promotion budget.
• B)is a complex method of budgeting.
• C)will increase promotional expenditures when business is poor.
• D)is especially suitable for new products.
• E)None of these answers is correct.

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Definitions:

Common Stock

A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's profits and assets.

Company

An organization engaged in commercial, industrial, or professional activities, either for profit or not-for-profit.

Preferred Stock

A category of corporate share that ranks above common stock in terms of asset and income claims, typically associated with predetermined dividend payments.

Par Value

The nominal value of a bond, stock, or coupon as stated in the financial instrument.