Stand-alone revenue allocation. Magic 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 Magic Systems and can be purchased individually as well as in a bundle. Magic Systems sells roughly equal quantities of the three products. The individual selling prices and per unit costs are as follows: Computer ComponentPC towerMonitorColor laser printerComputer bundle purchase priceIndividual Selling Price per Unit$1,150$ 250$ 600Cost per Unit$375S200S225$1,5001. Allocate the revenue from the computer bundle purchase to each of the hardware products using thestand-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 thestand-alone method based on cost per unit.3. Allocate the revenue from the computer bundle purchase to each of the hardware products using thestand-alone method based on physical units (that is, the number of individual units of product sold perbundle).4. Which basis of allocation makes the most sense in this situation? Explain your answer.Required

1. Allocate the revenue from the computer bundle purchase to each of the hardware products using the…

Answered: Computer Component PC tower Monitor…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Stand-alone revenue allocation. Magic 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 Magic Systems and can be purchased individually as well as in a bundle. Magic Systems sells roughly equal quantities of the three products. The individual selling prices and per unit costs are as follows:

Computer Component
PC tower
Monitor
Color laser printer
Computer bundle purchase price
Individual Selling Price per Unit
$1,150
$ 250
$ 600
Cost per Unit
$375
S200
S225
$1,500
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.
Required

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions