Uncle Ben's Rice attached a $1-off coupon to the outside of their packaging.They distributed 1,000,000 promotional packages,at a cost of $20,000 for design and production.They predict that the redemption rate will be 5%.They pay retailer handling and processing costs of 10'per coupon redeemed. What is the total cost of the coupon promotion to Uncle Ben's?

Question

Quizplus · Accepted Answer

First, let's calculate how many coupons are expected to be redeemed:

1,000,000 packages distributed x 5% redemption rate = 50,000 coupons redeemed

Next, let's calculate the cost of the coupons:

$1-off coupon x 50,000 coupons redeemed = $50,000

Now let's add in the other costs:

Design and production cost: $20,000 
Handling and processing cost: $0.10 x 50,000 coupons redeemed = $5,000

Total cost = $50,000 + $20,000 + $5,000 = $75,000

Therefore, the correct answer is C: $75,000.

Uncle Ben's Rice Attached a $1-Off Coupon to the Outside