Question

The owner of a cosmetics start-up told his employees, "We had a good year, and next year looks to be even better. I'm going to raise this year's promotion budget by 4.5 percent compared to last year's. We had strong growth in sales of close to 10 percent this year so I think we can do more advertising." This company is most likely using ________ budgeting.

Answer 1

Answer:

Percentage of sales

Explanation:

Budgeting can be defined as the process of controlling the amount of income that is realized by an individual or an organisation. A budget is a financial tool that is used for planning and coordination.

Percentage of sales budgeting is a type of advertising budget which is determined on the basis of previous sales of the product.

This type of budgeting a product to remain relevant in the market due to the continuous advertisement of the product thereby increasing sales.