onal Software Outlet sells two or more of the video games as a single package ye
ID: 2532160 • Letter: O
Question
onal Software Outlet sells two or more of the video games as a single package yers are keenly interested in individual product-profitability figures. Information to three bundled products and the stand-alone prices is a Selling Price Cost Package Packaged Price $44 $56 eading $25 $3.60 Reading Fun &Math; un $4.00. Reading Fun & $5.00 | 3 Al three Math Fun$30 nalysis $45 76 ng the stand-alone method with selling price as the weight for revenue allocation, what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)? A) $20 B) $22 C) $19 D) $25 50) Using the incremental method for revenue allocation, what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)? Assume Reading Fun is the primary product, followed by Math Fun, and then Analysis. A) $20 B) $22 D) $25 51) Using the stand-alone method with selling price as the weight for revenue allocation, what amount of revenue will be allocated to Math Fun in the package that contains all three products? A) $24.12 B) $30.00 C) $22.80 D) $25.33 62) The focus of joint costing is on allocating costs to individual products A) before the splitoff point B) after the splitoff point C) at the splitoff point at the end of productionExplanation / Answer
1) Solution: 20
Working:
25 / (25 + 30 ) * 44 = 20
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2) Solution: $25
Working: Since Reading fun is the primary product thus $25 will be allocated under incremental method
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3) Solution: $22.80
Working: 30 / (25 + 30 + 45) * 76 = 22.8
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4) Solution: at the split-off point
Working: At the split-off point, focus of joint costing is on allocation to individual products
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