Question

In: Accounting

Wang Inc. produces and sells DVDs to business people and students who are planning extended stays...

Wang Inc. produces and sells DVDs to business people and students who are planning extended stays in

China. It has been very successful with two​ DVDs: Beginning Mandarin and Conversational Mandarin.

It is introducing a third​ DVD, Reading Chinese Characters. It has decided to market its new DVD in two different packages grouping the Reading Chinese Characters DVD with each of the other two language DVDs.

information about the separate DVDs and the packages follow.

DVD

Selling Price

Beginning Mandarin (BegM)

$48

Conversational Mandarin (ConM)

$128

Reading Chinese Characters (RCC)

$32

BegM + RCC

$60

ConM + RCC

$150

1.

Using the selling​ prices, allocate revenues from the BegM + RCC package to each DVD in that package using​ (a) the​ stand-alone method;​ (b) the incremental​ method, in either​ order; and​ (c) the Shapley value method.

2.

Using the selling​ prices, allocate revenues from the ConM + RCC

package to each DVD in that package using​ (a) the​ stand-alone method;​ (b) the incremental​ method, in either​ order; and​ (c) the Shapley value method.

3.

Which method is most appropriate for allocating revenues among the​ DVDs? Why?

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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