Question

Hospital Equipment Company (HE) acquired several MRI machines for its inventory at a cost of $4,200 per machine. HEC usually sells these machines to hospitals at a price of $7.440. HEC also separately sells 12 months of training and repair services for fMRI machines for $1.860. HEC is paid $7440 cash on November 30 for the sale of an MRI machine delivered on December 1 HEC sold the machine at its regular price, but included one year of free training and repair service Required: t. For the machine sold at its regular price, but with one year of "free" training and repair service, determine the dollar amount of revenue earned from the equipment sale versus the revenue earned from the training and repair services Price

Answer 1

Solution:

	Allocated transaction Price
Equipment	$           5,952.00
Service	$           1,488.00

Notes:

1)Standalone price of Equipment = $7,440

2)Standalone price of Service = $1,860

3)Combine price of equipment and service = $ 7,440

4) Calculation:

	Allocated transaction Price	Calculation
Equipment	$           5,952.00	(7440*7440)/(7440+1860)
Service	$           1,488.00	(7440*1860)/(7440+1860)
Total	$           7,440.00