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Hooper Inc. offers a discount on an extended warranty on its eyePhone when the warranty is purchased at the time the eyePhone is purchased. The warranty normally has a price of $300, but Hooper offers it for $240 when purchased along with an eyePhone. Hooper anticipates a 75% chance that a customer will purchase the extended warranty along with the eyePhone. Assume Hooper sells 1,000 eyePhones with the extended warranty discount offer. What is the total stand-alone selling price that Hooper would use for the extended warranty discount option for purposes of allocating revenue among the performance obligations in those 1,000 eyePhone contracts?

A. $240,000
B. $60,000
C. $45,000
D. $0

User Rik
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1 Answer

6 votes

Answer:

C. $45,000.

Step-by-step explanation:

$60 * 75% * 1,000 phones

$45 * 1,000 = 45,000

User Shaunee
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