Question

"Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer’s home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,700, sells the remote separately for $100, and offers the installation service separately for $200. The entire package sells for $1,900. Required: How much revenue would be allocated to the TV, the remote, and the installation service?"

Please write a paragraph and explain it not just write the calculation. My problem is writing a paraghraph.

Answer 1

Explanation:

Revenue : Income generated by the organisation from the sales of product or services is termed as revenue.

From the above facts of the question, it can be ascertained that when the product sold by video planet They are sold in two categories:
The price of product varies is in both the cases:
case 1 : when TV, remote and installation services are sold together as a package it costs $ 1900.
Case 2: when the products are sold separately they are sold at a higher rate i.e television at dollar 1700, remote at dollar 100 installation services dollar 200.
  
so as per question requirement we have to allocate the entire package price to each product.

Therefore, for price allocation a ratio will be identified between total package prize divided by total of each product price when sold separately

= 1900/2000 = .95

Now, calculate the price of each product in entire package
Television 1700 X .95 =$1615
Remote 100 X .95. =$95
Installation services. 200 X .95 =$190
Total. $1900.