Mood-lites are colored lightbulbs that were developed according to research on how colors affect moods. In allocating funds for advertising the new lightbulbs, the manufacturer decided to budget a certain proportion of last year’s sales for advertising expenditures. Which allocation method was the manufacturer using?

A. Percentage-of-sales method

B. Self-defense method

C. Objective/task method

D. Share-of-market/share-of-voice method

E. Budget buildup method

A. Percentage-of-sales method

Explanation:

Given that in allocating funds for advertising the new lightbulbs, the manufacturer decides to budget a certain proportion of last year's sales for advertising expenditures. The allocation method used by the manufacturer is Percentage-of-sales method

Percentage-of-sales method is a procedure used to set advertising budgets, which bases the cost on a predetermined percentage of past sales or a forecast of future sales.

This method of advertising is popular because of its simplicity for use and the fact that it can always be related to sales