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Which method of promotion budgeting would most likely be used by small businesses? a.percentage of sales budgeting b.competitive parity budgeting c.all-you-can-afford d.objective and task budgeting e.relative scale budgeting Answer:c Page:486 Rationale:Common to many small businesses is all-you-can-afford budgeting in which money is allocated to promotion only after all other budget items are covered.1072
18-143ALL-YOU-CAN-AFFORD BUDGETINGAPPLICATIONImagine a small retailer saying, "Well, after budgeting for all of our expenses for next year, we still have about $7500 remaining for emergencies. How about if we budget 20 percent of that amount for advertising?" What budgeting technique is the small retailer using? 18-144OBJECTIVE AND TASK BUDGETINGDEFINITIONObjective and task budgeting is a budgeting method: a.that allocates funds to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold. b.that matches the competitor's absolute level of spending or the proportion per point of market share. c.that allocates funds to promotion only after all other budget items are covered. d.whereby the company determines its promotion objectives, outlines the tasks to accomplish these objectives, and determines the promotion cost of performing these tasks. e.that allocates funds to promotion based on the greatest percentage of possible available revenue. Answer:d Page:486-487 Other Locations:SGRationale:Key term definition—objective and task budgeting18-145OBJECTIVE AND TASK BUDGETINGDEFINITIONThe best approach to promotion budgeting is _____ budgeting method whereby the company determines its promotion objectives, outlines the tasks to accomplish these objectives, and determines the promotion cost of performing these tasks.
18-146OBJECTIVE AND TASK BUDGETINGDEFINITIONThe best approach to budgeting is objective and task budgeting, whereby the company determines its promotion objectives, outlines the tasks to accomplish those objectives, and: a.asks the ad agency for an estimate. b.asks the media to propose a program. c.determines the promotion cost of performing those tasks. d.determines what spending level top management will allow for the proposed program. e.surveys customers to determine what spending levels they think appropriate.