Use the Following Information to Answers Questions During 2014, Horn

question 91

Essay

Use the following information to answers questions During 2014, Horn Corp.started a construction job with a total contract price of $700,000.Horn has consistently used the completed contract method.The job was completed on December 15,
-Bundled sales Loon Inc., a software company sells new accounting software and user support bundled together.The fair value of the software is $1,500 and the fair value of the user support is $500. The user support is valid for a period of 12 months from the date of software purchase.To be able to compete with a competitor's offering, Loon decided to sell the bundle at a discount for $1,800. During its first month of sales, 100 units of this software bundle were sold at the discounted price, and expenses were $50,000. Instructions
a)Calculate the sale price that should be allocated to each component of the bundle using the
relative fair value method.
b)Calculate the sale price that should be allocated to each component of the bundle using the
residual value method.
c)Assuming that the relative fair value method is used and income tax rate is 30%, calculate
the net income applicable to Loon's first month of sales.

Recognize the legal implications of usury laws on different types of transactions.

Determine the legal outcomes of contested illegal wagers.

Understand the legal rights and remedies available in cases of fraudulent inducement in contract formation.

Analyze the legal consequences of contracts aiming to commit insurance fraud.

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Definitions:

Marginal Revenue

The additional revenue that will be generated by increasing product sales by one unit.

Output

Output refers to the quantity of goods or services produced by a company, industry, or economy within a certain period.

Nondiscriminating Monopolist

A monopolist that charges the same price to all consumers for its product, regardless of demand differences.

Elastic

Refers to the responsiveness of the demand or supply of a good or service to changes in its price.