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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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