Max's Movie Store Encounters Revenue-Allocation Decisions with Its Bundled Product

question 119

Essay

Max's Movie Store encounters revenue-allocation decisions with its bundled product sales. Here, two or more of the movie videos are sold as a single package. Managers at Max's are keenly interested in individual product-profitability figures. Information pertaining to its three bundled products and the stand-alone selling prices of its individual products is as follows:

Required:
a.With selling prices as the weights, allocate the $25 packaged price of "All Three" to the three videos using the stand-alone revenue-allocation method.
b.Allocate the $25 packaged price of "All Three" to the three types of videos using the incremental revenue-allocation method. Assume New Releases is the primary product, followed by Older Releases, and then Classics.

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Definitions:

Gross Motor Skills

Motor skills related to the development and coordination of large muscles; important for locomotion.

Food Security

A condition in which all people, at all times, have physical, social, and economic access to sufficient, safe, and nutritious food that meets their dietary needs and food preferences for an active and healthy life.

Fine Motor Skills

Motor skills related to the development and coordination of small muscles, such as those that move the fingers and eyes.

Gross Motor Skills

Physical abilities involving large body movements, such as walking, jumping, and throwing, which are crucial for mobility and coordination.