Exercise 18-15 Your answer is incorrect. Try again. Splish Appliance Center is a
ID: 2559793 • Letter: E
Question
Exercise 18-15 Your answer is incorrect. Try again. Splish Appliance Center is an experienced home appliance dealer. Splish Appliance Center also offers a number of services for the home appliances that it sells. Assume that Splish Appliance Center sells ovens on a standalone basis. Splish Appliance Center also sells installation services and maintenance services for ovens. However, Splish Appliance Center does not offer installation or maintenance services to customers who buy ovens from other vendors. Pricing for ovens is as follows. Oven only Oven with installation service Oven with maintenance services Oven with instaliation and maintenance services $820 830 960 1,000 In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $140. Additionally, the incremental amount charged by Splish Appliance Center for installation approximates the amount charged by independent third parties. Ovens are sold subject to a gereral right of return. If a customer purchases an oven with installation and/or maintenance services, in the event Splish Appliance Center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $820 Assume that a customer purchases an oven with both installation and maintenance services for $1,000 (b) Indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract. (De not round intermediate calculations, Round final answers to 2 decimal places Oven Instalation Maintenance 144 Click if you would like to Show Work for this questiont Open Show WorkExplanation / Answer
Oven
$820
Installation
$40
Maintenance
$140
Explanation;
It is clearly given that Maintenance separately priced at $140, thus Maintenance will be $140.
Apart from this we know that Oven cost is $820 and it is also given in the question that amount excess from $820 will be installation. So installation ($860 - $820) = $40.
Oven
$820
Installation
$40
Maintenance
$140
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