McElroy Inc., a marketing consulting firm, entered into the following three revenue contracts in March, 2021. 1. The contract with Customer A requries that McElroy Inc. provides 10 hours of consulting services at $300 per hour. 2. The contract with Customer B requires that McElroy, Inc. develops an electronic promotion of the customer's new product line. Payment for the services are equal to $6,000 plus 2% of the customer's sales over the one month promotion period. McElroy, Inc. estimates that there is a 30% chance of sales totaling $100,000, a 50% chance of sales totaling $150,000, and a 20% chance of sales totaling $200,000. 3. The contract with Customer C requires McElroy, Inc. to create a promotional mailing for its product for $8,000. McElroy Inc. will receive a bonus of $500 if the project is completed within 5 business days and a $250 bonus if the project is completed within 6 business days. Based on McElroy's estimate of the time to complete the project and status of other projects, McElroy estimates they are 80% likely to complete the project within 5 business days. What is the total transaction price for these 3 contracts? Question 18 options: a) $20,000 b) $17,000 c) $20,400 d) $19,500
McElroy Inc., a marketing consulting firm, entered into the following three revenue contracts in March, 2021.
1. The contract with Customer A requries that McElroy Inc. provides 10 hours of consulting services at $300 per hour.
2. The contract with Customer B requires that McElroy, Inc. develops an electronic promotion of the customer's new product line. Payment for the services are equal to $6,000 plus 2% of the customer's sales over the one month promotion period. McElroy, Inc. estimates that there is a 30% chance of sales totaling $100,000, a 50% chance of sales totaling $150,000, and a 20% chance of sales totaling $200,000.
3. The contract with Customer C requires McElroy, Inc. to create a promotional mailing for its product for $8,000. McElroy Inc. will receive a bonus of $500 if the project is completed within 5 business days and a $250 bonus if the project is completed within 6 business days. Based on McElroy's estimate of the time to complete the project and status of other projects, McElroy estimates they are 80% likely to complete the project within 5 business days.
What is the total transaction price for these 3 contracts?
Question 18 options:
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