Answer the Following Questions Using the Information Below:
Electro Corp

question 48

Multiple Choice

Answer the following questions using the information below:
Electro Corp sells a refrigerator and a freezer as a single package for $1,000. Other data are in the chart below.
$$\begin{array} { | l | c | c | c | } \hline & \text { Refrigerator } & \text { Full-size Freezer } & \text { Packaged Price } \\\hline \text { Selling price } & \$ 800 & \$ 400 & \$ 1,000 \\\hline \text { Manufactuing cost per unit } & \$ 600 & \$ 200 & \\\hline \text { Stand-alone product revenues } & \$ 1,200,000 & \$ 800,000 & \\\hline\end{array}$$
-Using the stand-alone method with physical units as the weight for revenue allocation,what amount will be allocated to the refrigerator?

• A) $500
• B) $20
• C) $600
• D) $825

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Definitions:

Par Common Stock

Common stock issued with a nominal value expressed in the corporate charter, which represents the stock's legal capital per share.

Market Price

The prevailing market price at which you can buy or sell an asset or service.

Cumulative Preferred Stock

A type of preferred stock that entitles shareholders to receive dividends in arrears before common stockholders can be paid dividends.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and a claim on part of the corporation's profits or losses.