Question

Harold Corporation has an existing contract to sell 200 units of product to a customer at $10 each. After the delivery of 150 units, the customer wants to extend the contract for an additional 100 units. The price quoted for these additional units is $9.50 each (standalone price) and they can be identified separately. The revenue recorded by Harold for the delivery of the next 15 units of product to this customer is:
A. $150.00
B. $145.00
C. $142.50
D. $147.50

Answer 1

Answer:

C. $142.50

Explanation:

Revenue is to be measured and recognized at the prevailing contract price agreed by the parties involved.

A contract gives rise to an agreement between two or more parties for which at least one party  has an obligation to be fulfilled to another in a bid to earn revenue. This fee is known as the  transaction price.

AS such, the additional units will be supplied at the price quote of $9.50 each. If 15 items are delivered,

Revenue earned = 15 * $9.50

= $142.50

Answer 2

Answer:

C. $142.50

Explanation:

From the existing contract,

200 units for $10 each

150 units were delivered so, 10 x 150= $1500.

The customer wants to extend the contract for additional 100 units at $9.50 each.

So,what is the revenue to Harold Corporation for these additional units which cost $9.50 for the next 15 units.

Therefore, 15 x 9.50=  $142.504