Homework Help is Here – Start Your Trial Now!
Business
Operations Management
Majestic Corporation provides call-center ordering services for Essential Oils magazine. Majestic receives an annual fee of $200,000 for providing such services and is also eligible to receive a performance bonus up to 65,000 if the average customer wait times are below certain thresholds at the end of the year. Ising historical results as well as current expectations, Majestic estimates the chances of achieving the different performance bonuses as shown in the table here. ssume there are NO revenue constraints, and the entity uses the expected value approach to record variable consideration when recognizing revenue during the period. Which is the amount of the performance bonus management can recognize in the transaction price? Average wait times Performance Bonus % Chance of Achieving < 1 minute $65,000 15% $45,000 $25,000 $5,000 < 2 minutes <3 minutes < 4 minutes 0 10% 50% 20% <5 minutes Management would include the variable consideration in the transaction price in the amount of $27,750. Management would not include the variable consideration in the transaction price because the amount of consideration is outside of the entity's influence. Management would include the variable consideration in the transaction price in the amount of $25,000. Management would not include the variable consideration in the transaction price because the amount of consideration is uncertain and is not expected to be resolved for a long period of time. 5%

Majestic Corporation provides call-center ordering services for Essential Oils magazine. Majestic receives an annual fee of $200,000 for providing such services and is also eligible to receive a performance bonus up to 65,000 if the average customer wait times are below certain thresholds at the end of the year. Ising historical results as well as current expectations, Majestic estimates the chances of achieving the different performance bonuses as shown in the table here. ssume there are NO revenue constraints, and the entity uses the expected value approach to record variable consideration when recognizing revenue during the period. Which is the amount of the performance bonus management can recognize in the transaction price? Average wait times Performance Bonus % Chance of Achieving < 1 minute $65,000 15% $45,000 $25,000 $5,000 < 2 minutes <3 minutes < 4 minutes 0 10% 50% 20% <5 minutes Management would include the variable consideration in the transaction price in the amount of $27,750. Management would not include the variable consideration in the transaction price because the amount of consideration is outside of the entity's influence. Management would include the variable consideration in the transaction price in the amount of $25,000. Management would not include the variable consideration in the transaction price because the amount of consideration is uncertain and is not expected to be resolved for a long period of time. 5%

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
See similar textbooks
icon
Related questions
Question
Majestic Corporation provides call-center ordering services for Essential Oils magazine. Majestic receives an annual fee of $200,000 for providing such services and is also eligible to receive a performance bonus up to $65,000 if the average customer wait times are below certain thresholds at the end of the year. Using historical results as well as current expectations, Majestic estimates the chances of achieving the different performance bonuses as shown in the table here. Assume there are NO revenue constraints, and the entity uses the expected value approach to record variable consideration when recognizing revenue during the period. Which is the amount of the performance bonus management can recognize in the transaction price? Average wait times Performance Bonus % Chance of Achieving $65,000 15% < 1 minute < 2 minutes < 3 minutes < 4 minutes < 5 minutes $45,000 $25,000 $5,000 0 10% 50% 20% 5% a. Management would include the variable consideration in the transaction price in the amount of $27,750. b. Management would not include the variable consideration in the transaction price because the amount of consideration is outside of the entity's influence. c. Management would include the variable consideration in the transaction price in the amount of $25,000. d. Management would not include the variable consideration in the transaction price because the amount of consideration is uncertain and is not expected to be resolved for a long period of time.
Transcribed Image Text:Majestic Corporation provides call-center ordering services for Essential Oils magazine. Majestic receives an annual fee of $200,000 for providing such services and is also eligible to receive a performance bonus up to $65,000 if the average customer wait times are below certain thresholds at the end of the year. Using historical results as well as current expectations, Majestic estimates the chances of achieving the different performance bonuses as shown in the table here. Assume there are NO revenue constraints, and the entity uses the expected value approach to record variable consideration when recognizing revenue during the period. Which is the amount of the performance bonus management can recognize in the transaction price? Average wait times Performance Bonus % Chance of Achieving $65,000 15% < 1 minute < 2 minutes < 3 minutes < 4 minutes < 5 minutes $45,000 $25,000 $5,000 0 10% 50% 20% 5% a. Management would include the variable consideration in the transaction price in the amount of $27,750. b. Management would not include the variable consideration in the transaction price because the amount of consideration is outside of the entity's influence. c. Management would include the variable consideration in the transaction price in the amount of $25,000. d. Management would not include the variable consideration in the transaction price because the amount of consideration is uncertain and is not expected to be resolved for a long period of time.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.
SEE MORE TEXTBOOKS