Management uses percentage of sales method

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Management uses percentage of sales method for setting its advertising and promotion budget in all markets. Sales in market A = $5 Million. Sales is market B = $10 million in 2015. The fix percentage of sales rate for the advertising budget is 5%. If management decides to go after market C where the projected gross profit will be $540,000 in the same year, then what should the increase in market share be to cover the advertising expense?

Note; Market C is roughly twice asbig as markets A + B, so you would need to spend twice as much in marketing to be equally effective.

Reference no: EM131068676

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