Axiom Company blends and sells designer fragrances. It has a Men's Fragrances Division and a Women's Fragrances Division, each with different sales strategies, distribution 16 channels, and product offerings. Axiom is now considering the sale of a bundled product called Sync, consisting of one bottle of Him, a men's cologne, and one bottle of Her, a women's perfume, two of Axiom's very successful products. Axiom sells equal quantities of Him and Her perfume. For the most recent year, Axiom reported the following: Product Retail Price Him $40.00 Her $60.00 Sync (Him and Her) $90.00 1. Allocate revenue from the sale of each unit of Sync to Him and Her using the following: The stand-alone revenue-allocation method based on the selling price of each product The incremental revenue-allocation method, with Him ranked as the primary product The incremental revenue-allocation method, with Her ranked as the primary product The Shapley value method 2. Of the four methods in requirement 1, which one would you recommend for allocating Sync's revenues to Him and Her? Explain.
Axiom Company blends and sells designer fragrances. It has a Men's Fragrances Division and a Women's Fragrances Division, each with different sales strategies, distribution 16 channels, and product offerings. Axiom is now considering the sale of a bundled product called Sync, consisting of one bottle of Him, a men's cologne, and one bottle of Her, a women's perfume, two of Axiom's very successful products. Axiom sells equal quantities of Him and Her perfume. For the most recent year, Axiom reported the following: Product Retail Price Him $40.00 Her $60.00 Sync (Him and Her) $90.00 1. Allocate revenue from the sale of each unit of Sync to Him and Her using the following: The stand-alone revenue-allocation method based on the selling price of each product The incremental revenue-allocation method, with Him ranked as the primary product The incremental revenue-allocation method, with Her ranked as the primary product The Shapley value method 2. Of the four methods in requirement 1, which one would you recommend for allocating Sync's revenues to Him and Her? Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Axiom Company blends and sells designer fragrances. It has a Men's Fragrances Division and a Women's Fragrances Division, each with different sales strategies, distribution
16
channels, and product offerings. Axiom is now considering the sale of a bundled product called Sync, consisting of one bottle of Him, a men's cologne, and one bottle of Her, a women's perfume, two of Axiom's very successful products. Axiom sells equal quantities of Him and Her perfume. For the most recent year, Axiom reported the following:
Product
Retail Price
Him
$40.00
Her
$60.00
Sync (Him and Her)
$90.00
1. Allocate revenue from the sale of each unit of Sync to Him and Her using the following:
- The stand-alone revenue-allocation method based on the selling price of each product
- The incremental revenue-allocation method, with Him ranked as the primary product
- The incremental revenue-allocation method, with Her ranked as the primary product
- The Shapley value method
2. Of the four methods in requirement 1, which one would you recommend for allocating Sync's revenues to Him and Her? Explain.
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