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DongDong
Inc. produces and sells DVDs to business people and students who are planning extended stays in
ChinaChina.
It has been very successful with two DVDs: Beginning
MandarinMandarin
and Conversational
MandarinMandarin.
It is introducing a third DVD, Reading
ChineseChinese
Characters. It has decided to market its new DVD in two different packages grouping the Reading
ChineseChinese
Characters DVD with each of the other two language DVDs. Read the requirements
LOADING…
.
Information about the separate DVDs and the packages follow.
| DVD | Selling Price | ||
| Beginning Mandarin (BegM) | $75 | ||
| Conversational Mandarin (ConM) | $75 | ||
| Reading Chinese Characters (RCC) | $25 | ||
| BegM + RCC | $80 | ||
| ConM + RCC | $80 | ||
Requirement 1. Using the selling prices, allocate revenues from the
BegMBegM
+
RCCRCC
package to each DVD in that package using (a) the stand-alone method; (b) the incremental method, in either order; and (c) the Shapley value method. (Round your answers to the nearest cent.)
| BegM | RCC | |
| (a) Stand-alone | ||
| (b) Incremental | ||
| BegM primary user | ||
| RCC primary user | ||
| (c) Shapley |
| Using the selling prices, allocate revenues from theBegMBegM
+RCCRCC package to each DVD in that package using (a) the stand-alone method; (b) the incremental method, in either order; and (c) the Shapley value method. |
|
| 2. | Using the selling prices, allocate revenues from theConMConM
+RCCRCC package to each DVD in that package using (a) the stand-alone method; (b) the incremental method, in either order; and (c) the Shapley value method. |
| 3. | Which method is most appropriate for allocating revenues among the DVDs? Why?
Please show your work |
Expert Answer
