ASIA BREWERY (AB) CORP. HAS A CONTRACT TO SELL 120,000 PRODUCTS TO A CUSTOMER FOR 108 MILLION (P900 PER PRODUCT) AT VARIOUS POINTS IN TIME OVER A SIX-MONTH PERIOD. AFTER 72,000 PRODUCTS HAVE BEEN DELIVERED, AB CORP. MODIFIES THE CONTRACT BY PROMISING TO DELIVER 24,000 MORE PRODUCTS FOR AN ADDITIONAL P20.52 MILLION, OR 855 PER PRODUCT (WHICH IS STANDALONE SELLING PRICE OF THE PRODUCTS AT THE TIME OF THE CONTRACT MODIFICATION) AB REGULARLY SELLS THE PRODUCTS SEPARATELY. REQUIRED: DETERMINE THE ADDITIONAL REVENUE ARISING FROM MODIFICATIONS. REQUIRED: DETERMINE THE BLENDED PRICE

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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CONTRACT MODIFICATION: SEPARATE PERFORMANCE OBLIGATION

ASIA BREWERY (AB) CORP. HAS A CONTRACT TO SELL 120,000 PRODUCTS TO A CUSTOMER FOR 108 MILLION (P900 PER PRODUCT) AT VARIOUS POINTS IN TIME OVER A SIX-MONTH PERIOD. AFTER 72,000 PRODUCTS HAVE BEEN DELIVERED, AB CORP. MODIFIES THE CONTRACT BY PROMISING TO DELIVER 24,000 MORE PRODUCTS FOR AN ADDITIONAL P20.52 MILLION, OR 855 PER PRODUCT (WHICH IS STANDALONE SELLING PRICE OF THE PRODUCTS AT THE TIME OF THE CONTRACT MODIFICATION) AB REGULARLY SELLS THE PRODUCTS SEPARATELY.

REQUIRED: DETERMINE THE ADDITIONAL REVENUE ARISING FROM MODIFICATIONS.

REQUIRED: DETERMINE THE BLENDED PRICE

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