Revenue allocation, bundled products. Petale Parfum (PP) manufactures and sells upscale perfumes. In recent months, PP has started selling its products in bundled form, as well as in individual form. Sales in 2007 of three products that have been sold individually are as follows:

Retail Price Units Sold Stand-alone Fraiche $110 20,000 Desarmer 88 37,500 Innocence 275 20,000 Suite Fraiche + Desarmer 165 Fraiche + Innocence 308 Each of the products is manufactured by a separate division.

Required 1. Compute the weights for allocating revenues to each division for each of the bundled products using:

a. The stand-alone revenue-allocation method based on total revenues of individual products.

b. The incremental revenue-allocation method, with Innocence ranked 1; Desarmer, 2;

and Fraiche, 3, based on retail prices ofindividual products. According to this ranking, the primary product in a suite has the highest rank, and so on.

2. Recalculate the allocation using the Shapley and the weighted Shapley value methods.

What method would you recommend and why?