John\'s Video Game Outlet encounters revenue-allocation decisions with its bundl
ID: 2599529 • Letter: J
Question
John's Video Game Outlet encounters revenue-allocation decisions with its bundled product sales. Here, two or more of the video games are sold as a single package. Managers at John's are keenly interested in individual product-profitability figures. Information pertaining to its three bundled products and the stand-alone prices of its individual products is as follows: ackage Pric Package Game AGame BGame C Package S2 Package Package 3 25 N $4 The unit manufacturing costs are $3.60, $4.00, and $5.00 for games A, B, and C, respectively. a) Calculate the allocation of packaged price for Game A in b) Calculate the allocation of packaged price for Game A in eCalculate the revenue allocation for Game A in Package 1 a Calculate the allocation of packaged price for Game A in Package 1 ONLY, using selling prices as the base Package 3 ONLY, using selling prices as the base ONLY, using physical units as the base Package 1 ONLY, using unit costs as the base.Explanation / Answer
GAME A
PKG 1
PKG 2
PKG 3
SP
25
25
25
MFG COST
3.60
3.60
3.60
CONTRIBUTION
21.40
21.40
21.40
GAME B
PKG 1
PKG 2
PKG 3
SP
30
NA
30
MFG COST
4
4
4
CONTRIBUTION
26
-4
26
GAME C
PKG 1
PKG 2
PKG 3
SP
NA
45
45
MFG COST
5
5
5
CONTRIBUTION
-5
40
40
ALLOCATION OF PACKAGED PRICE FOR GAME A IN PKG 1 ( $44) AND PKG 3 ( $76)
$24
22.80
NA
34.20
TOTAL
44
$76
c) ALLOCATION OF REVENUE FOR GAME A IN PKG 1 ( USING PHYSICAL UNITS)
$55/2 = $27.50
d) Allocation of packaged price for game A in package 1 ( using unit costs)
3.6/12.60 x 44 = $12.50
GAME A
PKG 1
PKG 2
PKG 3
SP
25
25
25
MFG COST
3.60
3.60
3.60
CONTRIBUTION
21.40
21.40
21.40
GAME B
PKG 1
PKG 2
PKG 3
SP
30
NA
30
MFG COST
4
4
4
CONTRIBUTION
26
-4
26
GAME C
PKG 1
PKG 2
PKG 3
SP
NA
45
45
MFG COST
5
5
5
CONTRIBUTION
-5
40
40
ALLOCATION OF PACKAGED PRICE FOR GAME A IN PKG 1 ( $44) AND PKG 3 ( $76)
- $20
- 19
$24
22.80
NA
34.20
TOTAL
44
$76
c) ALLOCATION OF REVENUE FOR GAME A IN PKG 1 ( USING PHYSICAL UNITS)
$55/2 = $27.50
d) Allocation of packaged price for game A in package 1 ( using unit costs)
3.6/12.60 x 44 = $12.50
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