Activity S$-$ Adaptive Review

Inter

Time

$00$:$02$:$06$

A pet groomer begins offering shampoo and nail clipping services in a package for $$80.$ The shampoo and clipping services are considered separate performance obligations. The cost of the shampoo service is $$24$ and the cost of the clipping service is $$9.$ The groomer sells the shampoo services individually for $$65$ but does not offer clipping services separately. The groomer has an average profit margin of $60\%($that is$,$ markup on cost of $150\%)$ and uses the expected cost plus a margin approach to determine stand$-$alone sales prices.

If the groomer sells one shampoo and clipping service package, which of the following is true regarding the revenue that should be allocated to each performance obligation?

$$14$ is allocated to the clipping.

B

C

D

$$65$ is allocated to the shampoo.

$$15$ is allocated to the clipping.

$$58$ is allocated to the shampoo.