Question

Orce Solutions, Inc., sela computer hardware to end consumers. The CX30 s sold as a "bundle", which includes three hardware products a personal computer (PC) tower, a 26-inch monitor and a color laser printer. Each of these products is made in a separate manuacturing division of Office Solutions and can be purchased individualy as wel as in a bundle Office Solutions sells roughly equal quantities of the three products. The individual selling prices and per unit costs are as follows: (Click to view the data.) Read the coouirements Requirement 1. Allocate the revenus from the computer bundle purchase to each of the hardwara products using the stand-alons mathad based on the individual saling price per unit. (Enter the allocation proportion as a decimal rounded to five decimal places. Round the revenue allocated to the nearest whole dollar) Computer component Allocation Proportion Revenue Allocated A Requirements PC tower Monitor Color laser printer Data Table 1. Alocate the revenue from the computer bundle purchase to each of the Hardware products using the stand-alone method based on the indiviuual seling price per unit 2. Alocale the revenue from the computer bundle purchase lo each of the hardware products using the standalone method based on cost per unit 3. Alocale lhe revenue from the computer bundle purchase lo each of the hardware products using the standalone method based on physical units (that the number of individual units of product sold per bundia) 4. Which basis of allocation makes the most sense in this situation? Explain your answer. $ Computer Component PC Tower Monitor Calor laser printer Computer bundle purchase price Individual Selling Price Per Unit Cost Per Unit 1,007 $ 480 285 $ 180 $ Print Donc $ 085 360 3 1,800 Print Done

Answer 1

1)

Items	standalone price	Allocation proportion	revenue allocated
PC Tower	1007	1007/1900= .53	1800*.53= 954
Monitor	285	285/1900 = .15	1800*.15= 270
Color Laser print	608	608/1900 =.32	1800*.32= 576
	1900		1800

2)

Items	standalone cost	Allocation proportion	revenue allocated
PC Tower	460	460/1000 =0.46	1800*0.46=828
Monitor	190	190/1000 =0.19	1800*0.19=342
Color Laser print	350	350/1000 =0.35	1800*0.35=630
	1000		1800

3)

Items	Physical quantity	Allocation proportion	revenue allocated
PC Tower	1	0.33	600
Monitor	1	0.33	600
Color Laser print	1	0.33	600
	3		1800

4)

Sharing on the basis of revenue makes the most sense. Using this method each division takes a uniform percentage decrease in the revenue received regardless of the cost of the division's individual product