C is corrent. Mill expects 60% of the 110,000 coupons to be redeemed, resulting in redemptions of 66,000 coupons. Since five coupons must be presented to receive a toy, it is expected that 13,200 toys (66,000 / 5) will be mailed in the future as a result of December year 1 sales. The net cost per toy for Mill is 30¢ (80¢ – 50¢), so the estimated liability for coupons is $3,960 (13,200 × 30¢).
A is incorrect. Mill expects 60% of the 110,000 coupons to be redeemed, resulting in redemption of 66,000 coupons. Since five coupons must be presented to receive a toy, it is expected that 13,200 toys (66,000 / 5) will be mailed in the future as a result of December year 1 sales. The net cost per toy for Mill is 30¢ (80¢ – 50¢), so the estimated liability for coupons is $3,960 (13,200 × 30¢).
B is incorrect. Mill expects 60% of the 110,000 coupons to be redeemed, resulting in redemption of 66,000 coupons. Since five coupons must be presented to receive a toy, it is expected that 13,200 toys (66,000 / 5) will be mailed in the future as a result of December year 1 sales. The net cost per toy for Mill is 30¢ (80¢ – 50¢), so the estimated liability for coupons is $3,960 (13,200 × 30¢).
D is incorrect. Mill expects 60% of the 110,000 coupons to be redeemed, resulting in redemption of 66,000 coupons. Since five coupons must be presented to receive a toy, it is expected that 13,200 toys (66,000 / 5) will be mailed in the future as a result of December year 1 sales. The net cost per toy for Mill is 30¢ (80¢ – 50¢), so the estimated liability for coupons is $3,960 (13,200 × 30¢).
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