Video planet ("vp") sells a big screen tv package consisting of a 60-inch plasma tv, a universal remote, and on-site installation by vp staff. the installation includes programming the remote to have the tv interface with other parts of the customer�s home entertainment system. vp concludes that the tv, remote and installation service are separate performance obligations. vp sells the 60-inch tv separately for $1,970 and sells the remote separately for $210, and offers the entire package for $2,340. vp does not sell the installation service separately. vp is aware that other similar vendors charge $260 for the installation service. vp also estimates that it incurs approximately $210 of compensation and other costs for vp staff to provide the installation service. vp typically charges 50% above cost on similar sales.
required:
calculate the stand-alone price of the installation service using each of the following approaches.
1 adjusted market assessment
2. expected cost plus margin
3. residual
Answers: 2
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