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Manny's DVD Store encounters revenue allocation decisions with its bundled product sales. Here, two ...

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Manny's DVD Store encounters revenue allocation decisions with its bundled product sales. Here, two ...

Manny's DVD Store encounters revenue allocation decisions with its bundled product sales. Here, two or more of the DVDs are sold as a single package. Managers at Max's are keenly interested in individual product profitability figures. Information pertaining to its three bundled products and the stand-alone selling prices of its individual products is as follows:

   Stand-Alone Selling Price   Cost      Package   Packaged
Price
New Releases   $15   $2.00      New & Old   $20
Older Releases   $10   $1.50      New & Classics   $17
Classics   $8   $1.25      All three   $25

Required:
a.    With cost as the weights, allocate the $17 packaged price of "New & Classics" using the stand-alone revenue allocation method.
b.   Allocate the $17 packaged price of "New & Classics" using the incremental    revenue allocation method. Assume New Releases is the primary product, followed by Older    Releases, and then Classics.

Textbook

Cost Accounting: A Managerial Emphasis, Canadian Edition

Edition: 7^th

Authors: Horngren, Datar, Rajan, Beaubien

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dxpayne Author

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Thank you, thank you, thank you!

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Smart ... Thanks!

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