Question

Carryon Company sells a product and a 12-month service package for that for a combined price of $800. Separately, the product and the service sell for $450 and $550, respectively. How much of the combined price should be allocated to the product?

Answer 1

The part of the combined price allocated to the product is less than 50% which might be around 35-40%.

Explanation:

Since the price of the product all alone is $450 and the price of the service alone is $550, so the combined amount totals up to be nothing less than $1000. But the company under the discount and offer, offers the both things combined for $800.

This shows that the company is under some loss which it has to incur. The loss is of $200 under the discount to be offered to the clients which serves as the incentive to the customers.