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5. [LO2] Office Magic, Inc., sells computer hardware to end consumers. The CX30 is sold as a bundle, which includes three hardware products: a
5. [LO2] Office Magic, Inc., sells computer hardware to end consumers. The CX30 is sold as a "bundle", which includes three hardware products: a personal computer (PC) tower, a 26-inch monitor, and a color laser printer. Each of these products is made in a separate manufacturing division of Office Magic and can be purchased individually as well as in a bundle. Office Magic sells roughly equal quantities of the three products. The individual selling prices and per unit costs are as follows: < Computer Component PC tower Monitor Individual Selling Price per Unit Cost per Unit $1,140 $ 260 $376 $200 Color laser printer Computer bundle purchase price $ 600 $1,500 $224 Required: < 1. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on the individual selling price per unit. < 2. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on cost per unit. < 3. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on physical units (that is, the number of individual units of product sold per bundle). < 4. Which basis of allocation makes the most sense in this situation? Explain your answer.
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