Question

Minarski Electronics sells computers and provides hardware maintenance services. On April 1st, Minarski sold a package deal containing a computer and a one-year unlimited maintenance/repair service for the computer at a bundle price of $1,000. If sold separately, the computer costs $750 and the one-year unlimited maintenance/repair service costs $450. How much revenue does Minarski Electronics recognize for the month ended April 30th, assuming that revenue is accrued monthly?

Answer 1

Answer:

Revenue to be recognized for the month ended April 30 = $656.25

Explanation:

Total cost if sold separately = $750 + $450 = $1,200

% of computer = $750/1200 = 62.5%

% of maintenance = $450/1200 = 37.5%

Sale at bundle price = $1,000

Revenue to be recognized for the month for Computer = $1000 * 62.5% = $625

Revenue to be recognized for the month for maintenance services = ($1000 * 37.5%) ÷ 12 = $31.25

( Annual revenue for services has to be apportioned over the 12 months)

Total amount to be recognized = $625 + $31.25 = $656.25

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