Duncan Hines printed a 50 cents-off coupon on the inside of their brownie boxes. They distributed 200,000 promotional packages, at a cost of $9,900 for design and production. They predict that the redemption rate will be 3%. They pay retailer handling and
Processing costs of 10¢ per coupon redeemed. What is the total cost of the coupon promotion to Duncan Hines?

Question

Quizplus · Accepted Answer

The total cost includes the design and production cost, plus the cost of redeemed coupons. With a 3% redemption rate on 200,000 coupons, 6,000 coupons are expected to be redeemed. At 10¢ per coupon, the redemption cost is $600 (6,000 * $0.10). Adding the $9,900 design and production cost gives a total of $10,500. However, the question also includes a 50 cents-off per coupon, which adds an additional cost of $3,000 (6,000 * $0.50) for the coupons redeemed. Therefore, the total cost is $10,500 + $3,000 = $13,500.

Duncan Hines Printed a 50 Cents-Off Coupon on the Inside