Question
Buzz's Educational Software Outlet sells two or more of the video games as a single package. Managers are keenly interested in individual product-profitability figures. Information
Buzz's Educational Software Outlet sells two or more of the video games as a single package. Managers are keenly interested in individual product-profitability figures. Information pertaining to three bundled products and the stand-alone prices is as follows:
| Stand-Alone Selling Price | Cost |
| Package | Packaged Price |
Reading Fun | $25 | $3.60 |
| 1. Reading Fun & Math Fun | $44 |
Math Fun | $30 | $4.00 |
| 2. Reading Fun & Analysis | $56 |
Analysis | $45 | $5.00 |
| 3. All three | $76 |
1) Using the stand-alone method with selling price as the weight for revenue allocation, what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)?
A) $20
B) $22
C) $19
D) $25
2) Using the incremental method for revenue allocation, what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)? Assume Reading Fun is the primary product, followed by Math Fun, and then Analysis.
A) $20
B) $22
C) $19
D) $25
3) Using the stand-alone method with selling price as the weight for revenue allocation, what amount of revenue will be allocated to Math Fun in the package that contains all three products?
A) $24.12
B) $30.00
C) $22.80
D) $25.33
4) Using the incremental method, what amount of revenue will be allocated to Math Fun in the package that contains all three products?
A) $24.12
B) $30.00
C) $22.80
D) $25.33
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