Answer:
$87, 500.
Explanation:
1 Pottery cereal bowl = 3 box tops + $1
60% of the box tops will be redeemed. In 2007
Total sales = 675,000 boxes of Frosted Flakes
Estimated to be redeemed = 60% of 675,000 = 405,000 boxes
Already redeemed = 330,000 box tops
Outstanding = Estimated redemption - Already redeemed
Outstanding = 405,000 - 330,000 = 75,000 box tops
1 Pottery cereal bowl = 3 box tops
Outstanding cereal bowl = 75,000/3 = 25,000
Cost of cereal bowl = $2.50
Monetary compensation = $1
Outstanding premiums = 25,000 x ($2.50 + $1)
= 25,000 x $3.5
= $87,500
