Video Planet VP sells a big screen TV package consisting of

Video Planet (\"VP\") sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer\'s home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,500, sells the remote separately for $200, and offers the installation service separately for $300. The entire package sells for $1,900. Required: How much revenue would be allocated to the TV, the remote, and the installation service?

Solution

Fair Market Value

% of Fair Market Value

Package

Revenue Allocation

TV

1500

75%

1900

1,425

Remote

200

10%

1900

190

Installation

300

15%

1900

285

2,000

100%

1,900

Thus, Revenue allocated to each department will be as follows:

TV 1,425

Remote 190

Installation 285

	Fair Market Value	% of Fair Market Value	Package	Revenue Allocation
TV	1500	75%	1900	1,425
Remote	200	10%	1900	190
Installation	300	15%	1900	285
	2,000	100%		1,900