Miracle Company manufacturers a product that is packaged and sold. On January 1, 2020 the Company introduced a premium system to promote its sales. Each sale is accompanied by 3 coupons to be able to purchase a plate. A plate is offered to customers sending in two coupons accompanied by a remittance of P2.

Date with respect to the premium offer are summarized below. 

                                                                                      2021                           2020

 Sales @ P250 per unit                                   P4,200,000                    P3,600,000

Purchase of premium                                       P600,000.                      P390,000

 Estimated number of plates that will be distributed. 80%                      70%

 Premiums distributed during the year.             17,000                              13,000

 Remaining premiums at the end of the year.    49,000                             13,000

Distribution cost P5 per plate

How much is the premium expense for 2020?

Answer rating: 100% (QA)

To calculate the premium expense for 2020 we need to first determine the total number of ... View the full answer