Hope Corporation manufactures and sells climate-controlled wine cabinets.
Its most popular model sells for $3,000 and comes with a basic 90-day war ranty. For an extra $150, this warranty is extended to 3 years, and for $300, the warranty is extended to 10 years.
a. If a customer buys a wine cabinet with the basic warranty, how much of the $3,000 paid represents DPGR to Hope?
b. Assume that a customer pays $3,150 to include the extended 3-year warranty.
How much of this amount is DPGR?
c. Assume that $3,300 is paid to include the extended 10-year warranty. How much is DPGR?
d. Could the sales agreement be modified so as to increase the amount qualifying as DPGR? Explain.