Phoenix Roasters Inc. sells high-end espresso machines to customers. The company enters into a contract with...
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Phoenix Roasters Inc. sells high-end espresso machines to customers. The company enters into a contract with a customer to provide an espresso machine, 100 pounds of whole beans, and one year of customer support that starts when the machine is delivered. The total price of the bundle is $2,500. Each item is considered a separate performance obligation. Phoenix Roasters regularly sells the espresso machines separately for $1,350. Phoenix Roasters does not sell customer support services separately. The company estimates the cost to be $800. A normal markup (or what the book calls a profit margin) for the company is 45% Phoenix Roasters does not sell whole coffee beans separately. However, competitors sell 100 pounds of whole beans for an average price of $650. How much of the transaction price should be allocated to customer support? Round to the nearest dollar. Phoenix Roasters Inc. sells high-end espresso machines to customers. The company enters into a contract with a customer to provide an espresso machine, 100 pounds of whole beans, and one year of customer support that starts when the machine is delivered. The total price of the bundle is $2,500. Each item is considered a separate performance obligation. Phoenix Roasters regularly sells the espresso machines separately for $1,350. Phoenix Roasters does not sell customer support services separately. The company estimates the cost to be $800. A normal markup (or what the book calls a profit margin) for the company is 45% Phoenix Roasters does not sell whole coffee beans separately. However, competitors sell 100 pounds of whole beans for an average price of $650. How much of the transaction price should be allocated to customer support? Round to the nearest dollar.
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