80.2K

Verified Solution

Link Copied!

Carla Vista Center is an experienced home appliance dealer. Carla Vista Center also offers a number of services for the home appliances that it sells. Assume that Carla Vista Center sells ovens on a standalone basis. Carla Vista Center also sells installation services and maintenance services for ovens. However, Carla Vista Center does not offer installation or maintenance services to customers who buy ovens from other vendors. Pricing for ovens is as follows. In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at \$160. Additionally, the incremental amount charged by Carla Vista Center for installation approximates the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services, in the event Carla Vista Center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $800. Assume that a customer purchases an oven with both installation and maintenance services for \$927. Based on its experience, Carla Vista Center believes that it is probable that the installation of the equipment will be performed satisfactorily to the customer. Assume that the maintenance services are priced separately (i.e., the three components are distinct). (b) Indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract. (Do not round intermediate calculations. Round final answers to 0 decimal places, es; 5,275) s In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $160. Additionally, the incremental amount charged by Carla Vista Center for installation approximates the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services, in the event Carla Vista Center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $800. Assume that a customer purchases an oven with both installation and maintenance services for \$927. Based on its experience, Carla Vista Center believes that it is probable that the installation of the equipment will be performed satisfactorily to the customer. Assume that the maintenance services are priced separately (i.e., the three components are distinct). (b) Indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract. (Do not round intermediate calculations. Round final answers to 0 decimal places, e.g. 5.275.) Oven $ Installation s Maintenance $

Answer & Explanation Solved by verified expert

See Answer