Problem 18-6 Buffalo Hardware takes pride as the "shop around the corner" that can compete with the big-box home improvement stores by providing good service from knowledgeable sales associates (many of whom are retired local handymen). Buffalo has developed the following two revenue arrangements to enhance its relationships with customers and increase its bottom line. 1. Buffalo sells a specialty portable winch that is popular with many of the local customers for use at their lake homes (putting docks in and out, launching boats, etc.). The Buffalo winch is a standard manufacture winch that Buffalo modifies so the winch can be used for a variety of tasks. Buffalo sold 70 of these winches during 2017 at a total price of $21,000, with a warranty guarantee that the product was free of any defects. The cost of winches sold is $15,900. The assurance warranties extend for a 3-year period with an estimated cost of $2,100. In addition, Buffalo sold extended warranties related to 20 Buffalo winches for 2 years beyond the 3-year period for $380 each. 2. To bolster its already strong customer base, Buffalo implemented a customer loyalty program that rewards a customer with 1 loyalty point for every $10 of purchases on a select group of Buffalo products. Each point is redeemable for a $1 discount on any purchases of Buffalo merchandise in the following 2 years. During 2017, customers purchased select group products for $103,000 (all products are sold to provide a 45% gross profit) and earned 10,300 points redeemable for future purchases. The standalone selling price of the purchased products is $103,000. Based on prior experience with incentives programs like this, Buffalo expects 9,700 points to be redeemed related to these sales (Buffalo appropriately uses this experience to estimate the value of future consideration related to bonus points)