Answer:
The total stand-alone selling price that Orange would use for the extended warranty discount option for purposes of allocating revenue among the performance obligations in those 1,000 oPhone contracts is $16,100
Explanation:
Provided data from the question;
normal price = $136
discounted price when purchased along with an oPhone = $113
chance that a customer will purchase the extended warranty along with the oPhone = 70 percent
Assumed number of oPhones sold with the extended warranty discount offer = 1000
To determine the total stand-alone selling price;
= (normal price - discounted price) × percentage chance × assumed amount
= ($136 - $113) × 0.7 × 1000
= $23 × 0.7 × 1000
= $16,100
Answer:
$16,100
Explanation:
Total stand-alone selling price to be used for the extended warranty discount option can be calculated as the difference between the warranty normal price of $136 and $113 that is offered for sale when purchased along with an oPhone multiply by the 70% chance that a customer will purchase the extended warranty along with the oPhone and 1,000 oPhones with the extended warranty discount offer. This is given as follows:
Total stand-alone selling price = ($136 - $113) × 70% × 1,000
= 23 × 700
Total stand-alone selling price = $16,100.
Therefore, he total stand-alone selling price that Orange would use for the extended warranty discount option for purposes of allocating revenue among the performance obligations in those 1,000 oPhone contracts is $16,100.
