Question 1

Give examples of bundled products for each of the following industries:
a.Resort hotel
b.Bank
c.Restaurant
d.Computer store
e.Super markets
f.Personal care products manufacturer

Accepted Answer

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Question 2

The price of a bundled product is typically more than the sum of the prices of the individual products sold separately.

Accepted Answer

The price of a bundled product is typically less than the sum of the prices of the individual products sold separately.

Question 3

Describe and discuss the two methods of allocating revenues of a bundled package to the individual products in that package.Describe any special problems associated with the method.

Accepted Answer

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Question 4

Revenue allocation based on the number of physical units is only appropriate when individual products in the bundle are of equal value.

Accepted Answer

The value of the products do not need to be of equal value.After the revenue allocation is calculated,the revenue allocation will then be equal for each product in the bundle.

Question 5

The stand-alone method uses the product in the bundle with the most sale and then uses this ranking to allocate bundled revenues to individual products.

Accepted Answer

The incremental-revenue allocation method uses the product in the bundle with the most sale and then uses this ranking to allocate bundled revenues to individual products.

Question 6

Software For You encounters revenue-allocation decisions with its bundled product sales.Here,two or more units of the software are sold as a single package.Managers at Software For You 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.Using the stand-alone revenue-allocation method,allocate the $380 packaged price of "All Three" to the three software products
  
b.Allocate the $380 packaged price of "All Three" to the three software products using the incremental revenue-allocation method.Assume Word Processing is the primary product,followed by Spreadsheet,and then Accounting Software.

Accepted Answer

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Question 7

The selling prices method under stand-alone revenue-allocation method is best because the weights explicitly consider the prices customers are willing to pay for the individual products

Accepted Answer

The selling prices method considers the prices customers are willing to pay for individual products and weights them accordingly, making it the best choice under the stand-alone revenue-allocation method.

Question 8

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.

Accepted Answer

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Question 9

When allocating the revenues between a bundled product offering,management judgement can be used in issuing revenue-allocation weights.

Accepted Answer

Management may use their judgement to determine the appropriate allocation of revenues between bundled product offerings, based on factors such as relative fair value and customer buying patterns.

Question 10

Explain three approaches to determining weights for the the stand-alone revenue-allocation.Which method do managers prefer?

Accepted Answer

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Quiz 15: Allocation of Support-Department Costs, common Costs, and Revenues

Give examples of bundled products for each of the following industries: a.Resort hotel b.Bank c.Restaurant d.Computer store e.Super markets f.Personal care products manufacturer