Question

Identify the correct statement about the per-unit expenditure approach of determining advertising expenses. Group of answer choices a. It is popular because it views sales as a function of advertising. b. It considers a percentage figure and applies it to either past or future sales. c. It attempts to determine the retail price by using production costs as a base. d. It is often based on the premise that advertising is defensive.

Answer 1

Answer:

The correct answer is letter "C": It attempts to determine the retail price by using production costs as a base.

Explanation:

Companies use different approaches to calculate the cost of advertising. The per-unit expenditure approach, just like its name states, aims to determine the unitary cost of advertising considering the price at which the products or services offered are sold to final consumers based on their production costs. This method is more often used for expensive products. Some other methods are the competitive parity, task approach, and research approach.

Answer 2

Answer:

Option C It attempts to determine the retail price by using production costs as a base.

Explanation:

This approach helps in determining the retail price of the competitors that he is charging in the market. This gives a better insight to what the production costs are of the competitors.This information is very important for pricing decisions and for cost control strategy. This gives a better insight where we are and where we must be. So the option C is correct here.