Question

The Ole Factory, Inc. sells scented beauty products and personal care items. It is currently offering a promotion in conjunction with the launch of its new consulting business: customers can purchase a Deluxe Beauty Kit for $500, which is the normal retail price for this item, plus get one month's free access to an online Beauty Consultant, which normally costs $40. The free access requires that the customer agree to default auto-renewal, cancellable at any time, with The Ole Factory estimating that the auto-renewal option and the appeal of the service will result in customers, on average, opting for 6 months of paid access to the online Beauty Consultant after the expiration of the free access. For each Deluxe Beauty Kit sold as part of this promotion, how much revenue and deferred revenue should The Ole Factory recognize at the time of sale and how should it be allocated

Answer 1

The answer is "$500 gross revenue for the kit was $463 and for the service, it was $37".

Step-by-step explanation:

The free access for one month is an online beauty expert who knows how to do his job because Ole Manufacturer markets the product differently as well as the other item included in the kit could be identified separately. It's a particular requirement. If two distinct performance standards were included in the sale, that total profit, as well as the market cost of the property, are assigned.

The product is the deluxe beauty package
`((\$ 500)/(\$ 540)) * \$ 500` for a fixed price of the remuneration or $463 for a week of free access
`((\$ 40)/(\$ 540)) * \$ 500` in revenue or $37