Question

Accorsi & Sons specializes in selling and installing upscale home theater systems. On March 1, 2016, Accorsi sold a premium home theater package that includes a projector, set of surround speakers, and high quality leather seats, along with complete installation service, for $36,000. If sold separately, each of these goods and services would have cost $16,300 (projector), $12,100 (speakers), $8,500 (seats), and $3,100 (installation), respectively.

Required:
How much of the transaction price would be allocated to the projector, the speakers, the leather seats, and the installation service, assuming that each of these four parts of the contract is a separate performance obligation? (Round the percentage values to 2 decimal places.)

Projector-

Surround Speaker-

Leather Seats-

Installation service-

Answer 1

Projector- $14,670

Surround Speaker- $10,890

Leather Seats- $7,650

Installation service- $2,790

Step-by-step explanation:

The computation of the transaction price for each four parts are shown below:

Projector:

= (Total cost of installation services) × (projector sale price ÷ Total original cost)

= ($36,000) × ($16,300 ÷ $40,000)

= $14,670

Surround Speaker:

= (Total cost of installation services) × (speaker sale price ÷ Total original cost)

= ($36,000) × ($12,100 ÷ $40,000)

= $10,890

Leather Seats:

= (Total cost of installation services) × (leather seats sale price ÷ Total original cost)

= ($36,000) × ($8,500 ÷ $40,000)

= $7,650

Installation service:

= (Total cost of installation services) × (installation service sale price ÷ Total original cost)

= ($36,000) × ($3,100 ÷ $40,000)

= $2,790

The total original cost would be

= $16,300 + $12,100 + $8,500 + $3,100

= $40,000