Advertising budget to promote significantly

Reference no: EM133650425

Question

A company's operating profit margin decreased in 2021 because the business doubled its advertising budget to promote a significantly and highly profitable new product. In the absence of any other changes, what is your most likely expectation of the company's operating profit margin in 2022?

a. it will be higher because expenses for advertising will likely be reduced significantly from the amount spent in 2021, and the sales of the new, more profitable product will increase margins

b. it will be lower because the new product line will continue to require a large marketing budget, so the operating expenses will be higher in 2022 than in 2021

c. it is likely to remain about the same as in 2021 because lower advertising expenses will be offset by higher labour costs.

Reference no: EM133650425

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