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Business, 05.05.2020 22:36 mikey952

Kingbird Appliance Center is an experienced home appliance dealer. Kingbird Appliance Center also offers a number of services for the home appliances that it sells. Assume that Kingbird Appliance Center sells ovens on a standalone basis. Kingbird Appliance Center also sells installation services and maintenance services for ovens. However, Kingbird Appliance Center does not offer installation or maintenance services to customers who buy ovens from other vendors. Pricing for ovens is as follows. Oven only $790Oven with installation service 840Oven with maintenance services 980Oven with installation and maintenance services 980In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $190. Additionally, the incremental amount charged by Kingbird Appliance Center for installation approximates the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services, in the event Kingbird Appliance Center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $790.(a) Assume that a customer purchases an oven with both installation and maintenance services for $980.(b) Indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract.

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