Help Save &Exit; Orange Inc. offers a discount on an extended warranty on its oP

Question

Help Save &Exit; Orange Inc. offers a discount on an extended warranty on its oPhone when the warranty is purchased at the time the oPhone is purchased The warranty normally has a price of S162, but Orange offers it for S126 when purchased along with an ophone. Orange artic pates a 75% chance that a customer will purchase the extended warranty along with the oPhone. Assume Orange sells to 1,000 oPhones with the extended warranty discount offer. What is the total stand-alone selling price that Orange would use for the extended warranty discount option for purposes of allocating revenue among the performance obligations in those OOO onone contracts? Multiple Choice $126,000 36000 Prev3 of10 Next MacBook Air 5 6

Explanation / Answer

Answer: $27000

Discount on extended warranty when purchased with oPhone = $162 - $126 = $36

Chance that the $36 discount will be taken by customers = 75%

Total standalone selling price = $36 x 75% x 1000 = $27000

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