Question

Problem 1

Media Mars (“MM”) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by MM staff. The installation includes programming the remote to have the TV interface with other parts of the customer’s home entertainment system. MM concludes that the TV, remote, and installation service are separate performance obligations.
MM sells the 60-inch TV separately for $3,400, sells the remote separately for $200, and offers the installation service separately for $400. The entire package sells for $3,800.

Required:

How much revenue would be allocated to the TV, the remote, and the installation service?

Answer 1

TV (3400/4000)*3800	3230
Remote (200/4000)*3800	190
Installation service (400/4000)*3800	380

(3400+200+400=4000)