Beaumont Company Enters into a Contract to Provide a High

question 42

Essay

Beaumont Company enters into a contract to provide a high quality diving-certification preparation package, including goggles, snorkels, air tanks, fins, a wetsuit, and 5 private lessons to get ready for diving certifications. The entire package sells for $2,500.
-Typically, if Beaumont were to sell the equipment only, it would ask for $2,000.
Required:
Assuming that the diving equipment and the certification lessons are separate performance obligations, estimate the stand-alone selling price of the lessons based on the residual approach.

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Definitions:

Value in Exchange

The worth of a good or service in comparison to other goods or services in the context of trade or commerce.

Marginal Utility

The extra pleasure or advantage gained from using an additional unit of a product or service.

Dozen Oysters

A quantity of twelve oysters, often used as a standard unit of sale in seafood markets.

Total Utility

The total satisfaction received from consuming a particular amount of goods or services.