The Rix Company manufactures equipment and will install the equipment. The Lazer Company purchases a piece of equipment and installation for grand total of $540,000. Rix normally will sell this equipment on a standalone basis for $522,500, but they do not have a standalone price for installation. The company will estimate it using the expected cost plus margin approach since they do not have external market prices for this type of installation.

Rixs cost of the installation is $25,000 and they feel the appropriate mark up percentage based on cost would be 10%. Assume the equipment and the installation meet the criteria to be two separate performance obligations.

How much of the transaction price should be allocated to the equipment and to the installation?