Information about the separate DVDs and the packages follow. (Click the icon to view the information.) Read the requirem

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Information About The Separate Dvds And The Packages Follow Click The Icon To View The Information Read The Requirem 1 (102.39 KiB) Viewed 55 times

Information About The Separate Dvds And The Packages Follow Click The Icon To View The Information Read The Requirem 2 (70.83 KiB) Viewed 55 times

Information about the separate DVDs and the packages follow. (Click the icon to view the information.) Read the requirements Yang Inc. produces and sells DVDs to business people and students who are planning extended stays in China. It has been very successful with two DVDs: Beginning Mandarin and Conversational Mandarin. It is introducing a third DVD. Reading Chinese Characters. It has also decided to market its new DVD in two different packages grouping the Reading Chinese Characters DVD with each of the other two language DVDS Requirement 1.Using the selling prices, allocate revenues from the BegM + RCC package to each DVD in that package using (a) the stand-alone method, and (b) the incremental method, with BegM and RCC in turn as the primary product. The goal of these methods is to allocate revenue from a bundled product to each product in a reasonable way. Let's review each of the three methods: The stand-alone revenue-allocation method uses product-specific information on the products in the bundle as welghts for allocating the bundled revenues to the individual products. The term stand-alone refers to the product as a separate (nonsuite) item. The incremental revenue-allocation method ranks individual products in a bundle according to criteria determined by management-such as the product in the bundle with the most sales-and then uses this ranking to allocate bundled revenues to individual products. The first-ranked product is the primary product in the bundle. The second ranked product is the first-incremental product, the third-ranked product is the second-incremental product, and so on. We will begin by allocating the revenues from the BegM + RCC package to each DVD in that package using (a) the stand-alone method. In this case we will use the individual selling prices for the weights for allocating the BegM + RCC package. (Round your answers to the nearest cent.) Separate Total of Total of Stand-alone separate revenue * combined package revenue BegM RCC Now allocate the revenues from the BegM + RCC package to each DVD in that package using (b) the incremental method. Recall that the primary product is allocated all of the revenue up to the price of the course (as a stand-alone course). Any "left over" revenues are then assigned to the incremental product. In our example we will assume two independent situations. In the first situation BegM is the primary product. The second situation reverses the order, with RCC as the primary product. Primary product Incremental product revenue Primary product: revenue ("Combined course revenue" - Primary product revenue) BegM revenue RCC Requirement 2. Using the selling prices, allocate revenues from the ConM+ RCC package to each DVD in that package using (a) the stand-alone method; and (b) the incremental method, with ConM and RCC in turn as the primary product. We will begin by allocating the revenues from the ConM+ RCC package to each DVD in that package using (a) the stand-alone method. Again, we will use the individual selling prices for the weights for allocating the ConM+ RCC package. (Round your answers to the nearest cent.)
Stand-alone cost Separate Total of Total of revenue separate revenue combined package ConM RCC $ 48.00 Now allocate the revenues from the ConM+ RCC package to each DVD in that package using (b) the incremental method. Similar to the process in requirement 1, the primary product is allocated all of the revenue up to the price of the course (as a stand-alone course). Any left over" revenues are then assigned to the incremental product. In our example we will assume two independent situations. One where ConM is the primary product and the other where RCC is the primary product. (Round your answers to the nearest cent.) Primary product Incremental user revenue Primary product: revenue ("Combined course revenue- Primary product revenue) ConM RCC Requirement 3. Which method is most appropriate for allocating revenues among the DVDs? Why? In general, the stand-alone method is fair if the demand for the products is approximately equal. A benefit of the stand-alone method is that it is is simple and easier to explain. The incremental method is generally more appropriate if one product has a higher level of demand than the other product. In that situation, the dominant product would be sold anyway so it should receive its stand-alone revenue, and the other product should receive the remainder. 1: Data Table Selling DVD Beginning Mandarin (BegM) $ 72 Conversational Mandarin (ConM) $ Reading Chinese Characters (RCC) $ 48 BegM + RCC $ ConM+ RCC $ 140 Price 112 100 2: Requirements 1. Using the selling prices, allocate revenues from the BegM + RCC package to each DVD in that package using (a) the stand-alone method; and (b) the incremental method with BegM and RCC in tum as the primary product. 2. Using the selling prices, allocate revenues from the ConM+ RCC package to each DVD in that package using (a) the stand-alone method, and (b) the incremental method, with ConM and RCC in tum as the primary product 3. Which method is most appropriate for allocating revenues among the DVDs? Why? 3. Definition A bundled product is a package of two or more products for services) that is sold for a single price but whose individual components may be sold as separate items at their own stand-alone" prices. The price of a bundled product is typically less than the sum of the prices of the individual products sold separately.