Author Question: Max's Movie Store encounters revenue-allocation decisions with its bundled product sales. Here, two ... (Read 45 times)

Beheh · **on:** Mar 6, 2021

Max's Movie Store encounters revenue-allocation decisions with its bundled product sales. Here, two or more of the movie videos 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 & Older	$20
Older Releases	$10	$1.50	New & Classics	$17
Classics	$8	$1.25	All three	$25

Required:

a.	With selling prices as the weights, allocate the $25 packaged price of "All Three" to the three

videos using the stand-alone revenue-allocation method.

b.	Allocate the $25 packaged price of "All Three" to the three types of videos using the incremental

revenue-allocation method. Assume New Releases is the primary product, followed by Older Releases, and then Classics.

nguyenhoanhat · **Reply #1 on:** Mar 6, 2021

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