Lexikon Pianos sells customized concert pianos throughout the U.S. Its grand concert piano sells for $200,000, which includes delivery and installation. The product comes with a two-year warranty that covers any product defects, and customers can choose to add an extended three-year warranty for maintenance and repair at a price of $2,000. Customers also get an option to upgrade traditional plastic keys to bone ones for an additional $20,000. The extended warranty would normally sell for $3,500, and the installation of bone keys carries a standalone price of $30,000.
Required:
(a) Given the information above, how many performance obligations exist in the contract to purchase a grand concert piano?
(b) Now, assume that the standalone price of the extended warranty is $2,000, and that of the bone key upgrade is $20,000. How many performance obligations exist in the contract to purchase a grand concert piano?

Question

Quizplus · Accepted Answer

The Answer of Lexikon Pianos sells customized concert pianos throughout the U.S. Its grand concert piano sells for $200,000, which includes delivery and installation. The product comes with a two-year warranty that covers any product defects, and customers can choose to add an extended three-year warranty for maintenance and repair at a price of $2,000. Customers also get an option to upgrade traditional plastic keys to bone ones for an additional $20,000. The extended warranty would normally sell for $3,500, and the installation of bone keys carries a standalone price of $30,000.
Required:
(a) Given the information above, how many performance obligations exist in the contract to purchase a grand concert piano?
(b) Now, assume that the standalone price of the extended warranty is $2,000, and that of the bone key upgrade is $20,000. How many performance obligations exist in the contract to purchase a grand concert piano?

Lexikon Pianos Sells Customized Concert Pianos Throughout the U