Question

Zahn, DDS, provides various dental services to its patients. In January, Zahn performs a tooth restoration service for a patient and also for the first time performs a new tooth enhancement service, for which is has not yet determined a stand-alone price. Zahn charges $890 for the services; the normal stand-alone price of the tooth restoration is $800. What amount should Zahn allocate to the new tooth enhancement service?

Answer 1

Zahn DDS should allocate $90 to the new tooth enhancement service.

Step-by-step explanation:

When allocating costs to different services, it is important to determine the stand-alone price of each service. In this case, Zahn DDS charges $890 for both the tooth restoration service and the new tooth enhancement service. However, the normal stand-alone price for the tooth restoration service is $800. We can calculate the amount that should be allocated to the new tooth enhancement service by subtracting the normal stand-alone price of the tooth restoration service from the total charges. So, the amount allocated to the new tooth enhancement service would be $890 - $800 = $90.