Answer:
Answer is explained in the explanation section.
Explanation:
Solution:
Data Given:
Price of Oven Only = $800
Price of Oven with installation services = $850
Price of Oven with maintenance services = $975
Price of Oven with Installation and maintenance = $1000
So, with this data, we can calculate the total price of the oven:
Total Price = $800 + 50 + 175 = 1025
Now, we need to find out the allocation of price to the oven by using the following formula:
PA = Price Allocation
PA = (Price of Oven Only divided by Total Price) multiplied by the Price paid by the customer.
So,
We have all the values, just plugging in the above equation:
PA = x $1000
PA = $780.48 is the price allocation for Oven.
Similarly, we need to find the Price allocation of maintenance services:
PA = (Price of maintenance Only divided by Total Price) multiplied by the Price paid by the customer.
PA = x 1000
PA = $170.73 is the amount that must be allocated to the maintenance services.
Similarly, for Installation services:
PA = (Price of installation Only divided by Total Price) multiplied by the Price paid by the customer.
PA = x 1000
PA = $48.78 is the price allocation for installation services.
