Answer the Following Questions Using the Information Below:
Buzz's Educational

question 130

Multiple Choice

Answer the following questions using the information below:
Buzz's Educational Software Outlet sells two or more of the video games as a single package. Managers are keenly interested in individual product-profitability figures. Information pertaining to three bundled products and the stand-alone prices is as follows:
$$\begin{array} { | l | c | c | l | c | } \hline & \begin{array} { c } \text { Stand-Alone } \\\text { Selling Price }\end{array} & { \text { Cost } } &{ \text { Package } } & \begin{array} { c } \text { Packaged } \\\text { Price }\end{array} \\\hline \text { Reading Fun } & \$ 25 & \$ 3.60 & \text { 1. Reading Fun \& Math Fun } & \$ 44 \\\hline \text { Math Fun } & \$ 30 & \$ 4.00 & \text { 2. Reading Fun \& Analysis } & \$ 56 \\\hline \text { Analysis } & \$ 45 & \$ 5.00 & \text { 3. All three } & \$ 76 \\\hline\end{array}$$
-Using the incremental method for revenue allocation,what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun) ? Assume Reading Fun is the primary product,followed by Math Fun,and then Analysis.

• A) $20
• B) $22
• C) $19
• D) $25

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Definitions:

Selling Short

The investment strategy of selling securities one does not currently own, with the expectation of buying them back later at a lower price.

Mark-To-Market

An accounting method where the value of assets and liabilities is adjusted to their current market values rather than being recorded at their original cost.

Tax Year

A 12-month period used for tax purposes, determining the timeframe over which income, deductions, and tax payments are calculated and reported.

Realize

To convert assets into cash or to acknowledge revenue or a profit in accounts.