Question 1. Dove Corporation manufactures and sells climate controlled wine cabinets. Its most popular model sells for $3,000 and comes with a basic 90-day warranty/ For am Extra $150 this warranty is extended to three years, and for $300 the warranty is extended 10 years
a. If a customer buys a wine cabinet with the basic warranty, how much of the $3,000 paid represents DPGR to Dove?
b. Assume a customer pays $3,150 to include the extended 3 year warranty. How much of this amount is DPGR?
c. Assume a customer pays $3,300 to include the extended 10 year warranty. How much of this amount is DPGR?
d. Could the sales agreement be modified so as to increase the amount qualifying as DPGR? Explain.
Question 2. Finch Corp. Sells portable air filtration system by mean of the internet and direct mail orders. Most of the components are purchased from foreign suppliers at a cost of $1,600. Finch supplies the remaining components and assemblies the final product at a cost of $400. Finch’s marketing, packaging, and shipping expenses total $40 per unit. Each unit is sold at $2,800 each.
a. What is Finch’s DPGR per unit?
b. It’s QPAI?