Question
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
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 $350. Minor Music sells both the Maestro keyboard and teaching software as a package deal for $500. The Maestro teaching software is not sold separately. Minor Music is aware that teaching software can be purchaed from other vendors for $200. Minor Music prices are generally 10% lower than what is charged by those vendors. Minor Music estimates that it incurs costs of approximately $100 per copy of the teaching software and usually charges 55% above cost on similiar products.
a)Â Estimate the stand-alone selling price of the software using the residual approach.
b)Â Estimate the stand-alone selling price of the software using the adjusted market assessment approach.
c)Â Estimate the stand-alone selling price of the software using the expected cost plus margin approach.
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