Fundamentals of Cost and Management Accounting Assignment
Fundamentals of Cost and Management Accounting
Part Four: Allocation of Support Department Costs, Common Costs and Revenues
Exercise No. 4
الاسم: الرقم الأكاديمي: رقم الشعبة:
Choose the best answer for every question of the following questions:
1) 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. Answer: a. New $15 + Older $10 + Classics $8 = $33.00 New $15 / $33 × $25 = $11.36 Old $10 / $33 × $25 = $ 7.58 Classics $8 / $33 × $25 = $ 6.06 Total $25.00
b. Product | Revenue Allocated | Revenue Remaining To Be Allocated | New Releases | $15 | $25 - $15 = $10 | Older Releases | $5 ($20-$15) | $25-$15-$5 = $5 | Classics | $5 ($25-$20) | none | Total revenue allocated | $25 | |
2) 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
Part Four: Allocation of Support Department Costs, Common Costs and Revenues
Exercise No. 4
الاسم: الرقم الأكاديمي: رقم الشعبة:
Choose the best answer for every question of the following questions:
1) 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. Answer: a. New $15 + Older $10 + Classics $8 = $33.00 New $15 / $33 × $25 = $11.36 Old $10 / $33 × $25 = $ 7.58 Classics $8 / $33 × $25 = $ 6.06 Total $25.00
b. Product | Revenue Allocated | Revenue Remaining To Be Allocated | New Releases | $15 | $25 - $15 = $10 | Older Releases | $5 ($20-$15) | $25-$15-$5 = $5 | Classics | $5 ($25-$20) | none | Total revenue allocated | $25 | |
2) 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