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(ROUND ALL ANSWERS 51. Wastedtime Inc. produces and sells video games. It has been very successful with two video games: Burning Daylight and Hang Out.
(ROUND ALL ANSWERS 51. Wastedtime Inc. produces and sells video games. It has been very successful with two video games: Burning Daylight and Hang Out. It is introducing a third video game, Mess Around. It has decided to market its new video game in two different packages, bundling Mess Around with each of the other two video games. Information about the separate video games and the packages follows: VIDEO GAME SELLING PRICE BURNING DAYLIGHT (BD) HANG OUT (HO) $130 $90 MESS AROUND (MA) $70 BD + MA HO+MA $160 $140 a) Using the selling prices, allocate revenues from the BD + MA package to each video game in the package. Complete the table. (8 marks) REVENUE ALLOCATION METHOD BURNING DAYLIGHT MESS AROUND Stand-Alone Method Incremental Method (BD First) Incremental Method (MA First) Shapley Value Method b) Using the selling prices, allocate revenues from the HO + MA package to each video game in the package. Complete the table. (8 marks) METHOD Stand-Alone Method Incremental Method (HO FIRST) Incremental Method (MA FIRST) REVENUE ALLOCATION HANG OUT MESS AROUND Shapley Value Method c) Which method is most appropriate for allocating revenues among the video games? Why? (2 marks)
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