Mana Corp. is evaluating a revenue arrangement to determine proper revenue recognition. The contract is for construction of 10 boats for a contract price of $ 1,160,000 . The customer needs the boats in its showrooms by February 1, 2019, for the boat purchase season; the customer provides a bonus payment of $ 17,400 if all boats are delivered by the February 1 deadline. The bonus is reduced by $ 5,800 each week that the boats are delivered after the deadline until no bonus is paid if the boats are delivered after February 15, 2019. Mana frequently includes such bonus terms in its contracts and thus has good historical data for estimating the probabilities of completion at different dates. It estimates an equal probability (25%) for each full delivery outcome: By February 1 By February 8 By February 15 After February 15 Probability 25% 25% 25% 25% Instructions 1. Which approach should Mana use to determine the transaction price for this contract? Explain. 2. Compute the transaction price for this contract