Suppose a company budgeted an operating profit of $100 on sales of $1,000. Actual sales were $900.

Question:

Suppose a company budgeted an operating profit of $100 on sales of $1,000. Actual sales were $900. The marketing department claimed that because sales were down 10%, it was responsible for only 10% of $100 or $10 of any drop in profit. Any further shortfall must be someone else’s responsibility. Comment on this claim.