Question

Winchell wrote a contract that involves two separate performance obligations. Winchell cannot estimate the stand-alone selling price of product A. Product B has a stand-alone selling price of $100. The price for the combined product is $120. How much of the transaction price would be allocated to the performance obligation for delivering product A

Answer 1

Given :

Stand alone price of product B = $100

Price of the combined product = $120

To Find :

Stand alone price of product A

Solution :

Now,

Stand alone price of Product A = 120 - 100 = $20

The allocation ration for the product A and B =

Stand alone price of product A

Stand alone price of product B

20 = 1:5

100

Allocated to the performance obligation for delivering product A =

$120 x 1

1+6

$17.1

So the answer is $ 17.1

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