Question

11.

Elmo's Educational Software Outlet sells two or more of the video games as a single package. Managers are keenly interested in individual product-profitability figures. Information pertaining to three bundled products and the stand-alone prices is as follows:

	Stand-Alone Selling Price	Cost		Package	Packaged Price
Reading Fun	$40	$7.20		1. Reading Fun & Math Fun	$58
Math Fun	$30	$8.00		2. Reading Fun & Analysis	$80
Analysis	$50	$10.00		3. All three	$100

Using the stand-alone method with selling price as the weight for revenue allocation, what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)?

Select one:

a. $40

b. $30

c. $33

d. $29

Answer 1

STAND ALONE PRICES

READING FUN = $ 40

MATH FUN = $ 30

PACKAGE COST = $ 58

PRICES TO BE ALLOCATED ON THE BASIS OF STAND ALONE PRICES

READING FUN = ($ 58 *(40/70)) = $ 33

HENCE OPTION C IS CORRECT