Muggs Co. includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Muggs $4 each. Muggs estimates that 45 percent of the coupons will be redeemed. Data for 2025 and 2026 are as follows: 2025 2026 Bags of dog food sold 500,000 600,000 Leashes purchased 18,000 22,000 Coupons redeemed 120,000 150,000 The premium expense for 2025 is $250,000. $112,500. $100,000. O $60,000.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Muggs Co. includes one coupon in each bag of dog food it sells. In return for eight coupons,
customers receive a leash. The leashes cost Muggs $4 each. Muggs estimates that 45
percent of the coupons will be redeemed. Data for 2025 and 2026 are as follows:
2025
2026
Bags of dog food sold
500,000
600,000
Leashes purchased
18,000
22,000
Coupons redeemed
120,000
150,000
The premium expense for 2025 is
$250,000.
$112,500.
$100,000.
O $60,000.
Transcribed Image Text:Muggs Co. includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Muggs $4 each. Muggs estimates that 45 percent of the coupons will be redeemed. Data for 2025 and 2026 are as follows: 2025 2026 Bags of dog food sold 500,000 600,000 Leashes purchased 18,000 22,000 Coupons redeemed 120,000 150,000 The premium expense for 2025 is $250,000. $112,500. $100,000. O $60,000.
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