Question

(MGHT 201/301) nent A franchise of automotive technidans has a contract arrangement for a rewards program with a car manufacturing company called MC. For every $4.00 of services perfomed by an automotive technidan at anyone of the franchise locations, the customer is awarded Car Dollars. The Car Dollars can be redeemed towards the purchase of a motor vehicle manufactured by SMC. In total the automotive technicians performed $20,200,000 worth of services in 2020. BMC have estimated the stand-alone seling price of $0.35 and for each Car Deler awarded, the automotive technicians wil pay $0.30 to the BMC for each Car Dollar awarded to its customers rULL SCREEN PRINTER VERstON BACK NEXT (a) Your answer is correct. Determine how the $20,200,000 transaction price would be allocated to the two performance obligations (the automotive services and the Car Dollars earmed by the customers). (Round percentage of total selling price calculations to 1 decimal place, e.g. 15.29% and final anewers to 0 declmal places, e.g. 125.) 18574712.6 Automotive Services 1625287.4 Car Dollars SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT Attempts: 2 of 2 used (b) Determine the amount of the commission revenue to be reported by the franchises in 2020 Version 4.24.16.2 Commieeian Das

pls find comission revenue

Answer 1

Solution:

Amount of services performed = $20200000

For every $4 = 1 car dollar

Therefore,

For $20200000 = $(20200000/4) car dollar

= 5050000 Car Dollar

Cost of 5050000 car dollar for franchisee = 5050000*0.30 = $1515000

Standalone selling price of 5050000 car dollar for BMC = 5050000*0.35 = $1767500

Therefore,

Difference of cost for franchise and selling price for franchisee = Commission Revenue

= $1767500-1515000

=$252500