Question

Question 11 Buzz's Educational Software Outlet ses two or more of the video games as a single package. Managers w Information pertaining to three bundled products and the stand-alone prices is as follows: 3 points Seven o nly interested in individual product profitability figures. Stand Alone Selling Price Cost Package Packaged Price 3 $48 Reading Fun Math Fun $21 $37 .801. Reading Fun & Math Fun $4.15 2. Reading Fun & Analysis $55 Analysis $48 $5.30 A three $82 Using the incremental method, what amount of revenue will be allocated to Math Fun in the package that contains all three products? Assume Reading Fun is the primary product, followed by Math Fun, and then Analysis. (Do not round any intermediary calculations.) CA $28.62 B. $20.89 C. $35.69 D. $37.00

Answer 1

Solution: The answer is

D. $37.00

Under Incremental method, the allocations are based on importances of the product in various product in that company. In this question it is given that primary product is reading fun, followed by math fun, and then analysis.

So, we have to allocate the revenue based on that

Reading Fun gets $ 21 from total revenue of $ 82

Math Fun gets $ 37 from total revenue of $ 82

Analysis gets $ 24 (82-21-37) from total revenue of $ 82.

option(A)(B)(C) are not correct.