Question: As product marketing manager, one of our jobs is to prepare recommendations to the Executive Committee as to how advertising expenditures should be allocated.
Last year's advertising budget of $40,000 was spent in equal increments over the four quarters. Initial expectations are that we will repeat this plan in the coming year.
However, the committee would like to know whether some other allocation would be advantageous and whether the total budget should be changed.
Our product sells for $40 and cost us $25 to produce.
Sales in the past have been seasonal, and our consultants have estimated seasonal adjustment factors for unit sales as follows:
Q1:90% Q2:110% Q3:80% Q4:120%
(A seasonal adjustment factor measures the percentage of average quarterly demand experienced in a given quarter)
In addition to production costs, we must take into account the cost of the sales force( projected to be $34,000 over the year, allocated as follow:
Q1 and Q2, $8,000 each; Q3 and Q4, $9,000 each), the cost of advertising itself, and overhead(typical around 15% of revenues).
Quarterly unit sales seem to run around 4,000 units when advertising is around $10,000. Clearly advertising will increase sales, but there are limits to its impact. Our consultants several years ago estimated the relationship between advertising and sales. Converting that relationship to current conditions gives the subsequent formula:
Unit sales= 35*seasonal factor * ?(3,000+advertising)
Create a data dictionary (glossary) for the advertising budget decision (only Data dictionary, do not build spreadsheet, no calculations in your answer).
Give the answer of given question and I need the answer step by step - prepare the data dictionary for the advertising budget decision.