A large provider of automobile insurance with $17 billion in revenue last year spent $1.8 billion on advertising and plans to continue spending the same percentage of sales on advertising next year. The average advertising-to-sales ratio for the auto insurance industry is 0.1 percent of sales. If the company projects $25 billion in sales next year, using the percentage-of-sales method of advertising budgeting, how much will the company budget for advertising if basing it on projected sales? How much would the company budget if it based its advertising spending on the industry advertising-to-sales ratio? Is the company consistent with the average industry spending on advertising? The advertising-to-sales ratio for the last year is (Round to four decimal places.)

A large provider of automobile insurance with $17 billion in revenue last year spent $1.8 billion on advertising and plans to continue spending the same percentage of sales on advertising next year. The average advertising-to-sales ratio for the auto insurance industry is 0.1 percent of sales. If the company projects $25 billion in sales next year, using the percentage-of-sales method of advertising budgeting, how much will the company budget for advertising if basing it on projected sales? How much would the company budget if it based its advertising spending on the industry advertising-to-sales ratio? Is the company consistent with the average industry spending on advertising? The advertising-to-sales ratio for the last year is (Round to four decimal places.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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