Question: Creative Computing sells a tablet computer called the Protab. The $875 sales price of a Protab Package includes the following: One Protab computer. A 6-month
Creative Computing sells a tablet computer called the Protab. The $875 sales price of a Protab Package includes the following: One Protab computer. A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. A coupon to purchase a Creative Probook e-book reader for $180, a price that represents a 30% discount from the regular Probook price of $600. It is expected that 25% of the discount coupons will be utilized. A coupon to purchase a one-year extended warranty for $70. Customers can buy the extended warranty for $70 at other times as well. Creative estimates that 45% of customers will purchase an extended warranty. Creative does not sell the Protab without the limited warranty, option to purchase a Probook, and the option to purchase an extended warranty, but estimates that if it did so, a Protab alone would sell for $855. Customers must pay $95 to purchase the extended warranty if they dont purchase it with the $70 coupon that was included in the Protab Package. Creative estimates that 45% of customers will use the $70 coupon to purchase an extended warranty. Required: 1. & 2. Indicated below whether each item is a separate performance obligation and allocate the transaction price of 90,000 Protab Packages to the separate performance obligations in the contract.
| Required: | |
| 1. & 2. | Indicated below whether each item is a separate performance obligation and allocate the transaction price of 90,000 Protab Packages to the separate performance obligations in the contract.
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| Item Description | Perfomance Obligation | Stand Alone Price | Percentage of total Stand Alond Price |
| Protab table | yes | ||
| Limited 6 month warranty | no | ||
| Option to purchase a probook | yes | ||
| Option to purchase extended warranty | yes |
| Item Description | Percentage of total Stand Alone Price | Total Transcation Price | Allocated Contract price |
| Protab table | |||
| Limited 6 month warranty | |||
| Option to purchase a probook | |||
| Option to purchase extended warranty |
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