Question: 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

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 $1,890 and sells the remote separately for $170, and offers the entire package for $2,180. VP does not sell the installation service separately. VP is aware that other similar vendors charge $220 for the installation service. VP also estimates that it incurs approximately $170 of compensation and other costs for VP staff to provide the installation service. VP typically charges 30% above cost on similar sales.

Expected Cost Plus Margin:

(the answer is not 286 and I am not sure what I am doing wrong)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!