Question

Wilson Links Products sells a product that involves two separate performance obligations: the SwingRight golf club weight and the SwingCoach teaching software. SwingRight has a stand-alone selling price of $150. Wilson sells both the SwingRight and the SwingCoach as a package deal for $200. The SwingCoach software is not sold separately. Wilson is aware that other vendors charge $100 for similar software, and Wilson's prices are generally 10% lower than what is charged by those vendors. Wilson estimates that it incurs approximately $65 of cost per copy of the software, and usually charges 50% above cost on similar products. Estimate the stand-alone selling price of the software using the residual approach

Answer 1

Answer:

$50

Explanation:

Given:

SwingRight has a stand-alone selling price = $150

The SwingCoach as a package deal = $200

Wilson estimated cost per copy of software = $65

Extra amount charged above cost = 50% of $65

Now,

Estimate the stand-alone selling price of the software using the residual approach will be calculated as:

= Total transaction price -  stand-alone selling price

= $200 - $150

= $50