A Company Sells a Software Suite That Includes a Word

question 4

Multiple Choice

A company sells a software suite that includes a word processor and spreadsheet applications. The suite sells for $250 and the items are also available separately for $200 (spreadsheet) and $170 (word processor) . The spreadsheet app is by far the best seller of the standalone product sales. Using the incremental-revenue allocation method and assuming that the spreadsheet is the primary product, how much of the $250 revenue from the bundled product sale would be allocated to the spreadsheet and to the word processing products?

• A) $200 of revenue for the spreadsheet and $50 for the word processor
• B) $200 of revenue for the spreadsheet and $0 for the word processor
• C) $135 of revenue for the spreadsheet and $115 for the word processor
• D) $250 of revenue for the spreadsheet and $0 for the word processor

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Definitions:

Flexible Source

A supply chain strategy that allows for the procurement of goods and services from multiple suppliers, enhancing adaptability and reducing dependency on single sources.

Forecast Accuracy

The degree to which a prediction or estimate corresponds to actual outcomes, often measured in the context of demand planning and supply chain management.

Overstocked Quantity

This term refers to an excessive amount of inventory beyond what is needed or can be sold, potentially leading to increased carrying costs and reduced efficiency.

Firm's Profits

The earnings of a company after all expenses and taxes have been subtracted from revenue, indicative of financial health and performance.