Funzy Cereal Includes One Coupon in Each Package of Wheatos

question 11

Multiple Choice

Funzy Cereal includes one coupon in each package of Wheatos that it sells and offers a toy car in exchange for $1.00 and 3 coupons. The cars cost Funzy $1.50 each. Experience indicates that 40% of the coupons eventually will be redeemed. During the last month of 2009, 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, 2009, income statement?

• A)$ 0.
• B)$ 400,000.
• C)$ 800,000.
• D)$1,200,000.[(12,000,000 40%) / 3] ($1.50 $1.00) = $800,000

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Definitions:

Self-Concept

The understanding and perception individuals have of themselves, including beliefs about one's attributes and who and what the self is.

Psychological Adjustment

The process by which individuals manage or cope with the demands and challenges of everyday life.

Organized Whole

A concept referring to an entity or system that is structured and operates as a complete unit.

Conditions of Worth

are standards imposed by others, especially during childhood, that individuals believe they must meet to be valued or loved.