1. Nullibug Pest Control, Incorporated was recently hired to exterminate an office complex for $380,000. Nullibug will receive an additional $7,000 based on the success of the extermination. The additional $7,000 will be paid in full if the extermination is fully successful after one month. That amount will be decreased to $5,000 if the extermination is successful after two months and $1,000 if successful after three months. Based on past experience with similar contracts, Nullibug estimates that there is a 30% probability that the process will be successful with the one-month period, a 66% probability that it will take two months to be successful, and a(n) 4% probability that the process will be effective after three months. Read the requirements! Requirement a. Determine the transaction price for this contract using the expected value approach. The transaction price for this contract using the expected value approach is $ Requirement b. Determine the transaction price for this contract using the most-likely-amount approach. The transaction price for this contract using the most-likely-amount approach is $ 1: Requirements Determine the transaction price for this contract using the expected value approach b. Determine the transaction price for this contract using the most-likely-amount approach. a. 2. Grammatico Party Company contracts with a customer to provide its birthday party package including a cake, balloons, and musical entertainment. It regularly sells the following products separate at the following standalone selling prices (Click the icon for the standalone selling prices.) 2 (Click the icon to view additional information.) Requirement How should Grammatico Party allocate the transaction price to each product? How is each product allocated? Balloons (1) (2) Cake Musical Entertainment (3) Hosting (4) Compute the allocated transaction price for each product. (Enter percentages to two decimal places. X.XX%. Round your answers to the nearest whole dollar. If a product does not have the contract discount allocated to it, leave the "Percentage of Standalone Selling Price" cells empty; do not select enter a zero.) Allocation of Transaction Percentage of Standalone Selling Price % Price Equipment (5) (6) (7) (8) % % % Total Item Standalone Selling Price $ 93 62 Balloons Cake Musical Entertainment Hosting 136 112 1. Nullibug Pest Control, Incorporated was recently hired to exterminate an office complex for $380,000. Nullibug will receive an additional $7,000 based on the success of the extermination. The additional $7,000 will be paid in full if the extermination is fully successful after one month. That amount will be decreased to $5,000 if the extermination is successful after two months and $1,000 if successful after three months. Based on past experience with similar contracts, Nullibug estimates that there is a 30% probability that the process will be successful with the one-month period, a 66% probability that it will take two months to be successful, and a(n) 4% probability that the process will be effective after three months. Read the requirements! Requirement a. Determine the transaction price for this contract using the expected value approach. The transaction price for this contract using the expected value approach is $ Requirement b. Determine the transaction price for this contract using the most-likely-amount approach. The transaction price for this contract using the most-likely-amount approach is $ 1: Requirements Determine the transaction price for this contract using the expected value approach b. Determine the transaction price for this contract using the most-likely-amount approach. a. 2. Grammatico Party Company contracts with a customer to provide its birthday party package including a cake, balloons, and musical entertainment. It regularly sells the following products separate at the following standalone selling prices (Click the icon for the standalone selling prices.) 2 (Click the icon to view additional information.) Requirement How should Grammatico Party allocate the transaction price to each product? How is each product allocated? Balloons (1) (2) Cake Musical Entertainment (3) Hosting (4) Compute the allocated transaction price for each product. (Enter percentages to two decimal places. X.XX%. Round your answers to the nearest whole dollar. If a product does not have the contract discount allocated to it, leave the "Percentage of Standalone Selling Price" cells empty; do not select enter a zero.) Allocation of Transaction Percentage of Standalone Selling Price % Price Equipment (5) (6) (7) (8) % % % Total Item Standalone Selling Price $ 93 62 Balloons Cake Musical Entertainment Hosting 136 112
