Roper's Cablevision encounters revenue allocation decisions with its bundled product sales. Two or more of its services are sold as a single package. Managers at Roper's are keenly interested in individual product profitability figures. Information pertaining to its three bundled products and the stand-alone prices of its individual products is as follows:
‪
The unit variable costs are estimated at $4.00, $3.00, and $2.50 for Sports, Lifestyle, and TV Classics, respectively. Basic Sports is considered to be the primary product, Lifestyle the first incremental, and TV Classics the second incremental .
Required:
a. Allocate the bundled revenue to each product in the 'Sports & Classics' bundle, using selling prices as the base.
b. What is the allocated revenue to the Sports in each bundle, using the incremental revenue allocation method?

Question

Roper's Cablevision encounters revenue allocation decisions with its bundled product sales. Two or more of its services are sold as a single package. Managers at Roper's are keenly interested in individual product profitability figures. Information pertaining to its three bundled products and the stand-alone prices of its individual products is as follows:
‪  
The unit variable costs are estimated at $4.00, $3.00, and $2.50 for Sports, Lifestyle, and TV Classics, respectively. Basic Sports is considered to be the primary product, Lifestyle the first incremental, and TV Classics the second incremental .
Required:
a. Allocate the bundled revenue to each product in the 'Sports & Classics' bundle, using selling prices as the base.
b. What is the allocated revenue to the Sports in each bundle, using the incremental revenue allocation method?

Quizplus · Accepted Answer

The Answer of Roper's Cablevision encounters revenue allocation decisions with its bundled product sales. Two or more of its services are sold as a single package. Managers at Roper's are keenly interested in individual product profitability figures. Information pertaining to its three bundled products and the stand-alone prices of its individual products is as follows:
‪  
The unit variable costs are estimated at $4.00, $3.00, and $2.50 for Sports, Lifestyle, and TV Classics, respectively. Basic Sports is considered to be the primary product, Lifestyle the first incremental, and TV Classics the second incremental .
Required:
a. Allocate the bundled revenue to each product in the 'Sports & Classics' bundle, using selling prices as the base.
b. What is the allocated revenue to the Sports in each bundle, using the incremental revenue allocation method?

Roper's Cablevision Encounters Revenue Allocation Decisions with Its Bundled Product