Question
Peters Pics encounters revenue-allocation decisions with its bundled movie deal. Here, two or more of the movie videos are sold as a single package. Managers
Peters Pics encounters revenue-allocation decisions with its bundled movie deal. Here, two or more of the movie videos are sold as a single package. Managers at Peters Pics are keenly interested in individual product-profitability figures. Information pertaining to its three bundled products and the stand-alone selling prices of its individual products is as follows:
Individual Products | Stand-Alone Selling Price | Peter's Cost to Acquire |
| Packages | Packaged Price |
New Releases | $15 | $2.00 |
| #1 New & Older | $20 |
Older Releases | $10 | $1.50 |
| # 2 New & Classics | $17 |
Classics | $8 | $1.25 |
| #3 All Three (New, Older, & Classics) | $25 |
With selling prices as the weights, allocate the $25 packaged price of "All Three" to the three videos using the stand-alone revenue-allocation method.
a) new $10.53; older $7.89; classics $6.58
b) new $8.33; older $8.33; classics $8.33
c) new $15.00; older $10.00; classics 0 -
d) new $11.36; older $7.58; classics $6.06
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