# 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.