GEICO, the number-two auto insurer with $15 billion in revenue last year, spent $0.8 billion on advertising that year and p

Question

2 years ago

8

GEICO, the number-two auto insurer with $15 billion in revenue last year, spent $0.8 billion on advertising that year and p

lans to continue spending the same percentage of sales on advertising next year. The average advertising-to-sales ratio for the insurance industry is 0.3 percent of sales. If GEICO projects $19 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?

Business

1 answer:

Oduvanchick [21] · Answer 1 · 2022-08-01T19:49:19+03:00

Answer:

$1.01 billion

Explanation:

The computation of the amount for advertising based on projected sales is shown below:

= Advertising expense ÷ sales × projected sales in next year

= $0.8 billion ÷ $15 billion × $19 billion

= $1.01 billion

First we find out the advertise to sales ratio after than we multiplied it with the projected sales in next year in order to find out the advertising based on projected sales

​GEICO, the​ number-two auto insurer with ​$15 billion in revenue last​ year, spent ​$0.8 billion on advertising that year and p

GEICO, the number-two auto insurer with $15 billion in revenue last year, spent $0.8 billion on advertising that year and p