Barlo Lunch Snacks places a coupon in each box of its cracker product. Customers may send in five coupons and $3, and the company will send them a recipe book. Sufficient books were purchased at a cost of $5 each. A total of 500,000 boxes of product were sold in 2016. It was estimated that 4% of the coupons would be redeemed. During 2016, 9,000 coupons were redeemed. What is Barlo's premium expense for 2016?

Question

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To calculate Barlo's premium expense for 2016, we first determine the number of recipe books sent out based on the redemption of coupons. Since it takes 5 coupons to redeem one book, 9,000 coupons redeemed means 1,800 books were sent out (9,000 / 5 = 1,800). Each book costs the company $5, but customers also pay $3 per book when redeeming coupons. Therefore, the net cost to the company per book is $2 ($5 cost - $3 customer payment). Multiplying the net cost per book by the number of books sent gives the total premium expense: 1,800 books * $2 = $3,600. However, this calculation does not match any of the provided options, suggesting a misunderstanding in the initial calculation or a mistake in the options provided. Given the options, the correct approach to find the intended answer would involve re-evaluating the calculation steps or assumptions. Since none of the calculations based on the provided data and question lead to the options given, there might be an error in the interpretation of the question or the options provided.

Barlo Lunch Snacks Places a Coupon in Each Box of Its