Question
Gwen runs a company that provides corporate health and wellness programs. One of her sales people signed a contract at the beginning of the quarter
Gwen runs a company that provides corporate health and wellness
programs. One of her sales people signed a contract at the beginning of
the quarter for a very large client. It was a bundle of services to be
provided over the next year. The contract was for $120,000, with equal
payments at the beginning of each month ($10,000 per month). The new
client is a very high profile and well known company, so Gwen is very
excited.
This is the first bundled contract that the company has sold and the
salesperson felt like it was a great deal. It starts with an intense
bootcamp in the first month for all employees. That will require a lot of
work and Gwen would normally charge $30,000 for the bootcamp. Each
month throughout the contract they will offer an & intensive weekend& ; of
workouts and diet advice. Gwen normally charges $5,000 for each of
these. They also will provide access to their online program, which has
activity and food logs as well as preprogrammed exercise suggestions
and a weekly inspirational email. Gwen would normally charge a
company of this size $15,000 for one year of access to the website.
How much revenue should Gwen recognize at the end of the first quarter
(3 months into the deal)?
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