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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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