Software For You encounters revenue-allocation decisions with its bundled product sales. Here, two or more units of the software are sold as a single package. Managers at Software For You 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 |
| Word Processing (WP) | $125 | $18 | | WP & SS | $220 |
| Spreadsheet (SS) | $150 | $20 | | WP & AS | $280 |
| Accounting Software (AS) | $225 | $25 | | All three | $380 |
Required:
| a. | Using the stand-alone revenue-allocation method, allocate the $380 packaged price of "All |
Three" to the three software products
| 1. | with selling prices as the weights. |
| 2. | with individual product costs as the weights. |
| 3. | based on physical units. |
| b. | Allocate the $380 packaged price of "All Three" to the three software products using the |
incremental revenue-allocation method. Assume Word Processing is the primary product, followed by Spreadsheet, and then Accounting Software.
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