Neakanie Industries sells specialized mountain bikes.Each specialized bike purchased includes free maintenance service for 12 months.The price of the specialized bike is $1,000.When sold separately,a maintenance contract is $200 and a comparable but non-specialized bike is $600.If Neakanie sold 3 bikes on December 1,how much total revenue would the company recognize on December 31?

Question

Quizplus · Accepted Answer

$1,000 × [$600/($600 + $200)] = $750;$750 × 3 = $2,250;$1,000 × [$200/($600 + $200)] = $250;$250 × 3 × 1/12 = $62.50;$2,250 + $62.50 = $2,312.50.

Neakanie Industries Sells Specialized Mountain Bikes