Cullumber Center is an experienced home appliance dealer. Cullumber Center also offers a number of services for the home appliances that it sells. Assume that Cullumber Center sells ovens on a standalone basis. Cullumber Center also sells installation services and maintenance services for ovens. However, Cullumber Center does not offer installation or maintenance services to customers who buy ovens from other vendors. Pricing for ovens is as follows. Oven only Oven with installation service Oven with maintenance services Oven with installation and maintenance services In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $190. Additionally, the incremental amount charged by Cullumber Center for installation approximates the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services, in the event Cullumber Center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $800. Oven Assume that a customer purchases an oven with both installation and maintenance services for $936. Based on its experience, Cullumber Center believes that it is probable that the installation of the equipment will be performed satisfactorily to the customer. Assume that the maintenance services are priced separately (i.e., the three components are distinct). Installation (b) Indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract. (Do not round intermediate calculations. Round final answers to O decimal places, e.g. 5,275.) Maintenance CA CA LA $800 850 759 990 47 936 129
Cullumber Center is an experienced home appliance dealer. Cullumber Center also offers a number of services for the home appliances that it sells. Assume that Cullumber Center sells ovens on a standalone basis. Cullumber Center also sells installation services and maintenance services for ovens. However, Cullumber Center does not offer installation or maintenance services to customers who buy ovens from other vendors. Pricing for ovens is as follows. Oven only Oven with installation service Oven with maintenance services Oven with installation and maintenance services In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $190. Additionally, the incremental amount charged by Cullumber Center for installation approximates the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services, in the event Cullumber Center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $800. Oven Assume that a customer purchases an oven with both installation and maintenance services for $936. Based on its experience, Cullumber Center believes that it is probable that the installation of the equipment will be performed satisfactorily to the customer. Assume that the maintenance services are priced separately (i.e., the three components are distinct). Installation (b) Indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract. (Do not round intermediate calculations. Round final answers to O decimal places, e.g. 5,275.) Maintenance CA CA LA $800 850 759 990 47 936 129
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jay
Transcribed Image Text:* Your answer is incorrect.
Cullumber Center is an experienced home appliance dealer. Cullumber Center also offers a number of services for the home
appliances that it sells. Assume that Cullumber Center sells ovens on a standalone basis. Cullumber Center also sells installation
services and maintenance services for ovens. However, Cullumber Center does not offer installation or maintenance services to
customers who buy ovens from other vendors. Pricing for ovens is as follows.
Oven only
Oven with installation service
Oven with maintenance services
Oven with installation and maintenance services
In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at
$190. Additionally, the incremental amount charged by Cullumber Center for installation approximates the amount charged by
independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or
maintenance services, in the event Cullumber Center does not complete the service satisfactorily, the customer is only entitled to a
refund of the portion of the fee that exceeds $800.
Assume that a customer purchases an oven with both installation and maintenance services for $936. Based on its experience,
Cullumber Center believes that it is probable that the installation of the equipment will be performed satisfactorily to the customer.
Assume that the maintenance services are priced separately (i.e., the three components are distinct).
Oven
(b) Indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract. (Do not round
intermediate calculations. Round final answers to O decimal places, e.g. 5,275.)
Installation
+A
$
$
CA
Maintenance $
LA
$800
850
759
990
936
47
129
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