Funzy report as the promotional expense

Reference no: EM13122170

Funzy Cereal includes on coupon in each package of wheatos that it sells and offers a toy car in exchange for $1.00 and 3 coupons. The crs cost Funzy $1.50 each. Experience indicates that 40% of the coupons eventually will be redeemed. During the last month of 2011, the first month of the offer, Funzy sold 12 million boxes of wheatos and 2.4 million of the coupons were redeemed. What amount should Funzy report as a promotional expense for coupons on its December 31, 2011, income statement?

a. $800,000

b. $0

c. $400,000

d. $1,200,000

Reference no: EM13122170

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