In an effort to increase sales, Blue Razor Blade Company inaugurated a sales promotion campaign on June 30, 2011, whereby Blue placed a coupon in each package of razor blades sold, the coupons being redeemable for a premium. Each premium costs Blue $.50, and five coupons must be presented by a customer to receive a premium. Blue estimated that only 60 percent of the coupons issued will be redeemed. For the six months ended December 31, 2011, the following information is available:

What is the estimated liability for premium claims outstanding at December 31, 2011?

Question

In an effort to increase sales, Blue Razor Blade Company inaugurated a sales promotion campaign on June 30, 2011, whereby Blue placed a coupon in each package of razor blades sold, the coupons being redeemable for a premium. Each premium costs Blue $.50, and five coupons must be presented by a customer to receive a premium. Blue estimated that only 60 percent of the coupons issued will be redeemed. For the six months ended December 31, 2011, the following information is available:

What is the estimated liability for premium claims outstanding at December 31, 2011?

Quizplus · Accepted Answer

The Answer of In an effort to increase sales, Blue Razor Blade Company inaugurated a sales promotion campaign on June 30, 2011, whereby Blue placed a coupon in each package of razor blades sold, the coupons being redeemable for a premium. Each premium costs Blue $.50, and five coupons must be presented by a customer to receive a premium. Blue estimated that only 60 percent of the coupons issued will be redeemed. For the six months ended December 31, 2011, the following information is available:

What is the estimated liability for premium claims outstanding at December 31, 2011?

In an Effort to Increase Sales, Blue Razor Blade Company