1. Using the incremental method for revenue allocation, what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math

ACCOUNTING

Multiple Choice

Elmo's Educational Software Outlet sells two or more of the video games as a single package. Managers are keenly interested in individual product-profitability figures. Information pertaining to three bundled products and the stand-alone prices is as follows:


Stand-Alone

Selling Price


Cost



Package


Packaged

Price

Reading Fun


$50


$7.20



1. Reading Fun & Math Fun


$88

Math Fun


$60


$8.00



2. Reading Fun & Analysis


$112

Analysis


$90


$10.00


3. All three

$152


Using the incremental method for revenue allocation, what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)? Assume Reading Fun is the primary product, followed by Math Fun, and then Analysis.

a. $40

b. $44

c. $38

d. $50

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