Question:
Elmo's Educational Software Outlet sells two or more of the video games as a single package. Managers are keenly interested in individual product-profitability figures. Information pertaining to three bundled products and the stand-alone prices is as follows:
Stand-Alone
Selling Price
Cost
Package
Packaged
Price
Reading Fun
$50
$7.20
1. Reading Fun & Math Fun
$88
Math Fun
$60
$8.00
2. Reading Fun & Analysis
$112
Analysis
$90
$10.00
3. All three
$152
Using the incremental method for revenue allocation, what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)? Assume Reading Fun is the primary product, followed by Math Fun, and then Analysis.