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4. Minor Music sells a product that contains two performance obligations: the Maestro keyboard and the Maestro teaching software. The Maestro keyboard has a stand-alone
4. Minor Music sells a product that contains two performance obligations: the Maestro keyboard and the Maestro teaching software. The Maestro keyboard has a stand-alone selling price of $1500. Minor Music sells both the Maestro keyboard and teaching software as a package deal for $1700. The Maestro teaching software is not sold separately. Minor Music is aware that teaching software can be purchaed from other vendors for $250. Minor Music prices are generally 10% lower than what is charged by those vendors. Minor Music estimates that it incurs costs of approximately $125 per copy of the teaching software and usually charges 40% above cost on similiar products. a) Estimate the stand-alone selling price of the software using the residual approach. b) Estimate the stand-alone selling price of the software using the adjusted market assessment approach. c) Estimate the stand-alone selling price of the software using the expected cost plus margin approach. |
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