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

question 107

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:

Personality

The combination of characteristics or qualities that form an individual's distinctive character, influencing their behaviors and interactions.

Important Factor

A critical element or aspect that significantly influences outcomes or decisions.

Habit

A regular behavior or practice that an individual performs automatically.

Comfort

A state of physical and emotional ease, often achieved through supportive environments or relationships.