Describe the stand-alone revenue-allocation method.

Describe the incremental revenue-allocation method.

How might the choice of allocation method impact the profitability of each division (phone, cable, Internet)?

What role does the cost allocation method (which is already in place) play in the method of revenue allocation?

Which method would division managers prefer?

Method Media is a regional provider of technology services. Method began as a local telephone company in 1947, serving a three-county area. As technology has advanced, Method moved into the cable television market, Internet service, and now fiber-optic Internet.

Currently, Method bills customers separately for phone, cable, and Internet. Currently, only 14% of their customers obtain all three services from Method. To increase that percentage, Method is rolling out a package that provides all three products at a bundled rate.

Until this point, the revenue stream was clear because the billing was separate for each service. Now, the accounting department must determine a method for distributing the revenue for the package to each product.