Revenue allocation, bundled products. Couture Corp sells Samsung 7 cases. It has a Men's Division and a Women's Division. Couture is now considering the sale of a bundled product called Dynamic Duo consisting of Smarty, a men's case, and Sublime, a women's case. For the most recent year, Couture sold equal quantities of Smarty and Sublime and reported the following: Home Page Layout Formulas Insert A Product Retail Price 2 Smarty 3 Sublime 4 Dynamic Duo (Smarty and Sublime) S 40.00 60.00 90.00
Revenue allocation, bundled products. Couture Corp sells Samsung 7 cases. It has a Men's Division and a Women's Division. Couture is now considering the sale of a bundled product called Dynamic Duo consisting of Smarty, a men's case, and Sublime, a women's case. For the most recent year, Couture sold equal quantities of Smarty and Sublime and reported the following: Home Page Layout Formulas Insert A Product Retail Price 2 Smarty 3 Sublime 4 Dynamic Duo (Smarty and Sublime) S 40.00 60.00 90.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Of the four methods following, which one would you recommend for allocating Couture’s revenues to Smarty and Sublime? Explain.
a. The stand-alone revenue-allocation method based on selling price of each product
b. The incremental revenue-allocation method, with Smarty ranked as the primary product
c. The incremental revenue-allocation method, with Sublime ranked as the primary product
d. The Shapley value method
Transcribed Image Text:Revenue allocation, bundled products. Couture Corp sells Samsung 7 cases. It has a Men's
Division and a Women's Division. Couture is now considering the sale of a bundled product called Dynamic
Duo consisting of Smarty, a men's case, and Sublime, a women's case. For the most recent year, Couture
sold equal quantities of Smarty and Sublime and reported the following:
Home
Page Layout
Formulas
Insert
A
Product
Retail Price
2 Smarty
3 Sublime
4 Dynamic Duo (Smarty and Sublime) S
40.00
60.00
90.00
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