Question

) A company sells a software suite that includes a word processor and spreadsheet applications. The suite sells for $250 and the items are also available separately for $200 (spreadsheet) and $170 (word processor). The spreadsheet app is by far the best seller of the standalone product sales. Using the incremental-revenue allocation method and assuming that the spreadsheet is the primary product, how much of the $250 revenue from the bundled product sale would be allocated to the spreadsheet and to the word processing products?

Answer 1

Allocated to the the word processing products would be$80

To the spreadsheet would be allocated revenues for $170

Step-by-step explanation:

In order to calculate how much of the $250 revenue from the bundled product sale would be allocated to the the word processing products we would have to use the following formula:

allocated to the the word processing products= sold price suits- spreadsheet price

allocated to the the word processing products= $250-$170

allocated to the the word processing products=$80

To the spreadsheet would be allocated revenues for $170