Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,930, sells the remote separately for $190, and offers the entire package for $2,260. VP does not sell the installation service separately. VP is aware that other similar vendors charge $240 for the installation service. VP also estimates that it incurs approximately $190 of compensation and other costs for VP staff to provide the installation service. VP typically charges 40% above cost on similar sales. Required: 1. to 3. Estimate the stand-alone selling price of the installation service using each of the following approaches. Adjusted market assessment Expected cost plus margin Residual Stand-Alone Selling Price

Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,930, sells the remote separately for $190, and offers the entire package for $2,260. VP does not sell the installation service separately. VP is aware that other similar vendors charge $240 for the installation service. VP also estimates that it incurs approximately $190 of compensation and other costs for VP staff to provide the installation service. VP typically charges 40% above cost on similar sales. Required: 1. to 3. Estimate the stand-alone selling price of the installation service using each of the following approaches. Adjusted market assessment Expected cost plus margin Residual Stand-Alone Selling Price

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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