Question

Minarski Electronics sells computers and provides hardware maintenance services. On April 1^st, 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 $840 and the one-year unlimited maintenance/repair service costs $360. How much revenue does Minarski Electronics recognize for the month ended April 30^th, assuming that revenue is accrued monthly?

(A) $725

(B) $870

(C) $1,000

(D) $30

Answer 1

Total revenue is recognized individually:
Computer			840
maintenance service			360
Total revenue is recognized individually:			1200
Sales of $ 1000 to be apportioned as per above ratio i.e. 840:360
Sales revenue of Computer= 1000*840/1200 = 700
Service revenue for 12 months = 1000*360/1200 = 300
Therefore, revenue to be recognized for the month off April;
Sales revneue				700
Service revenue f or one month (300*1/12)				25
Rrevenue for the month of April				725
Answer is A. $ 725.