The Per-Unit Expenditure Method of Determining Advertising Budgets Is Best

question 17

Multiple Choice

The per-unit expenditure method of determining advertising budgets is best exemplified by:

• A)a television manufacturer spending a fixed monetary amount on advertising for each unit of the product expected to be sold.
• B)the manager of a clothing company estimating the advertising budget on the basis of research findings.
• C)a grocer using the availability of current revenues to set the upper limit of the advertising budget.
• D)the manager of an automobile manufacturing company taking a percentage figure and applying it to either past or future sales.

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Definitions:

Budget Performance Report

A report that summarizes actual costs, standard costs, and the differences for the units produced.

Cost Centers

Parts of an organization to which costs can be allocated, but which do not directly generate revenues.

Operating Expenses

Costs incurred during the normal functioning of a business, excluding the cost of goods sold.

Support Departments

Units within an organization that provide essential services to other departments or divisions but do not directly produce revenue.