An audit report included the following section:

Finding: Local newspaper and television advertising expenditures for 1986 exceeded those for 1985 by 20 percent, while sales increased only 12 percent in those markets. Company guidelines have suggested that all costs should be closely scrutinized and that managers should try to hold increases below 10 percent. Marketing management attributes the 20 percent cost increase to a strategy to reach a broader audience than did the previous strategy of limiting advertising to point-of-sale displays.

We conclude that the increased cost has not been effective and is not cost-justified. We therefore recommend that the advertising expenditure be reduced for newspaper and television to no more than 12 percent above the 1985 amount.

Required:

a. Evaluate the evidence used to support the audit conclusion and recommendation above.

b. What additional evidence would you suggest in this case?