2: Requirements 1. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on the individual selling price per unit. 2. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on cost per unit. 3. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on physical units (that is, the number of individual units of product sold per bundle).
2: Requirements 1. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on the individual selling price per unit. 2. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on cost per unit. 3. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on physical units (that is, the number of individual units of product sold per bundle).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Business Systems, Inc., sells computer hardware to end consumers. The CX30 is sold as a "bundle", which includes three hardware products: a personal computer (PC) tower, a 26-inch monitor, and a color laser printer. Each of these products is made in a separate manufacturing division of
Business Systems and can be purchased individually as well as in a bundle.
Business Systems sells roughly equal quantities of the three products. The individual selling prices and per unit costs are as follows:
Read the requirements2.
Requirement 1. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on the individual selling price per unit. (Enter the allocation proportion as a decimal rounded to five decimal places. Round the revenue allocated to the nearest whole dollar.)
|
Computer component
|
Allocation Proportion
|
Revenue Allocated
|
|---|---|---|
|
PC tower
|
|
|
|
Monitor
|
|
|
|
Color laser printer
|
|
|
Requirement 2. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on cost per unit. (Enter the allocation proportion as a decimal rounded to five decimal places. Round the revenue allocated to the nearest whole dollar.)
|
Computer component
|
Allocation Proportion
|
Revenue Allocated
|
|---|---|---|
|
PC tower
|
|
|
|
Monitor
|
|
|
|
Color laser printer
|
|
|
Requirement 3. Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on physical units (that is, the number of individual units of product sold per bundle). (Round the revenue allocated to the nearest whole dollar.)
|
Computer component
|
Allocation Proportion
|
Revenue Allocated
|
|---|---|---|
|
PC tower
|
(1)
|
|
|
Monitor
|
(2)
|
|
|
Color laser printer
|
(3)
|
|
Requirement 4. Which basis of allocation makes the most sense in this situation? Explain your answer.
Sharing on the basis of (4) makes the most sense. Using this method each division takes (5)
.
1: Data Table
|
Computer Component
|
Individual Selling Price Per Unit
|
Cost Per Unit
|
|---|---|---|
|
PC Tower
|
$780
|
$246
|
|
Monitor
|
$285
|
$138
|
|
Color laser printer
|
$435
|
$216
|
|
Computer bundle purchase price
|
$1,200
|
|
2: Requirements
|
1.
|
Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on the individual selling price per unit.
|
|
2.
|
Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on cost per unit.
|
|
3.
|
Allocate the revenue from the computer bundle purchase to each of the hardware products using the stand-alone method based on physical units (that is, the number of individual units of product sold per bundle).
|
|
4.
|
Which basis of allocation makes the most sense in this situation? Explain your answer.
|
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