Acct306 Homework Ch15 - CHAPTER 15 ALLOCATION OF...

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15-1 CHAPTER 15 ALLOCATION OF SUPPORT-DEPARTMENT COSTS, COMMON COSTS, AND REVENUES 15-25 Revenue allocation, bundled products. 1a. Under the stand alone revenue-allocation method based on selling price, Monaco will be allocated 30% of all revenues, or $39 of the bundled selling price, and Innocence will be allocated 70% of all revenues, or $91 of the bundled selling price, as shown below. Stand-alone method, based on selling prices Monaco Innocence Total Selling price $48 $112 $160 Selling price as a % of total ($48 ÷ $160; $112 ÷ $160) 30% 70% 100% Allocation of $130 bundled selling price (30% × $130; 70% × $130) $39 $91 $130 1b. Under the incremental revenue-allocation method, with Monaco ranked as the primary product, Monaco will be allocated $48 (its own stand-alone selling price) and Innocence will be allocated $82 of the $130 selling price, as shown below. Incremental Method (Monaco rank 1) Monaco Innocence Selling price $48 $112 Allocation of $130 bundled selling price ($48; $82 = $130 – $48) $48 $82 1c. Under the incremental revenue-allocation method, with Innocence ranked as the primary product, Innocence will be allocated $112 (its own stand-alone selling price) and Monaco will be allocated $18 of the $130 selling price, as shown below.

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