Diagon Alley Ltd is an online retailer which sells magical gift items. It has received an order from Mr. Potter to buy a wizard costume, a magic wizard wand, and a set of magic glasses for $2,200. Diagon Alley Ltd regularly sells wizard costumes separately and therefore, the stand-alone selling price ($1,700 per costume) is directly observable. However, the stand-alone selling prices of magic wizard wands and magic glasses are not yet observable because they are new items recently developed by Hogwarts Ltd. Therefore, Diagon Alley Ltd must estimate the stand-alone selling prices for magic wizard wands and magic glasses. The following are the estimated stand-alone selling prices for the items.

Product	Stand-alone selling price
A wizard costume		$1,700
A magic wizard wand		$500
A set of magic glasses		$400
Total		$2,600

Diagon Alley Ltd will deliver the items to customers at different points in time.

Required:

(a) Explain whether and what kind of separate performance obligations exist. ( 2 marks )

(b) How much of the transaction price to allocate to each performance obligation. (3 marks)