Max's DVD Store Encounters Revenue Allocation Decisions with Its Bundled

question 114

Essay

Max's DVD Store encounters revenue allocation decisions with its bundled product sales.Here,two or more of the DVDs 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:

Listening Efficiency

The ability to accurately receive and interpret messages in the communication process.

Efficiency Rate

A measure of the effectiveness with which a task or process is performed, typically expressed as a ratio of output to input.

Privacy Concerns

Issues or anxieties related to the protection of personal information and the control over how such information is collected, used, and shared by entities.

Listening Selectively

The practice of focusing attention on specific information or sounds while ignoring others during communication.