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 cost per coupon redeemed to Uncle Ben's?

Question

Quizplus · Accepted Answer

The total cost includes the design and production cost ($20,000) plus the cost of redeemed coupons. With a 5% redemption rate on 1,000,000 coupons, 50,000 coupons are expected to be redeemed. Each coupon costs $1 plus a $0.10 handling fee, totaling $1.10 per coupon. Thus, the additional cost for redeemed coupons is 50,000 * $1.10 = $55,000. The total cost is $20,000 (design and production) + $55,000 (redemption) = $75,000. The cost per coupon redeemed is $75,000 / 50,000 = $1.50.

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