
Concept explainers
Approaches for estimating stand-alone selling prices
• LO5–6
(This exercise is a variation of E 5–3.)
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 $1,750 and sells the remote separately for $100, and offers the entire package for $1,900. VP does not sell the installation service separately. VP is aware that other similar vendors charge $150 for the installation service. VP also estimates that it incurs approximately $100 of compensation and other costs for VP staff to provide the installation service. VP typically charges 40% above cost on similar sales.
Required:
1. Estimate the stand-alone selling price of the installation service using the adjusted market assessment approach.
2. Estimate the stand-alone selling price of the installation service using the expected cost plus margin approach.
3. Estimate the stand-alone selling price of the installation service using the residual approach.

Want to see the full answer?
Check out a sample textbook solution
Chapter 5 Solutions
Loose Leaf Intermediate Accounting
- Hello tutor please given General accounting question answer do fast and properly explain all answerarrow_forwardPlease explain the solution to this financial accounting problem with accurate explanations.arrow_forwardI need help with this financial accounting question using standard accounting techniques.arrow_forward
- Pinnacle Corp. reports sales of $15 million for Year 2, with a gross profit margin of 35%. 25% of Pinnacle's sales are on credit. Item Year I Accounts Receivable $200,000 Year 2 $250,000 $1,200,000 $1,500,000 $1,000,000 $1,100,000 Inventory Accounts Payable What is the accounts payable days outstanding at the end of Year 2 for Pinnacle Corp.?arrow_forwardI am searching for the correct answer to this financial accounting problem with proper accounting rules.arrow_forwardCan you help me solve this financial accounting question using valid financial accounting techniques?arrow_forward
- Please explain the solution to this general accounting problem with accurate principles.arrow_forwardPlease provide the accurate answer to this financial accounting problem using appropriate methods.arrow_forwardI am looking for the correct answer to this general accounting question with appropriate explanations.arrow_forward
- Pkg Acc Infor Systems MS VISIO CDFinanceISBN:9781133935940Author:Ulric J. GelinasPublisher:CENGAGE L
