Reference no: EM131295733
Creative Computing sells a tablet computer called the Protab. The $620 sales price of a Protab Package includes the following:
• One Protab computer.
• A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months.
• A coupon to purchase a Creative Probook e-book reader for $150, a price that represents a 30% discount from the regular Probook price of $500. It is expected that 20% of the discount coupons will be utilized.
• A coupon to purchase a one-year extended warranty for $40. Customers can buy the extended warranty for $40 at other times as well. Creative estimates that 45% of customers will purchase an extended warranty.
• Creative does not sell the Protab without the limited warranty, option to purchase a Probook, and the option to purchase an extended warranty, but estimates that if it did so, a Protab alone would sell for $600.
Customers must pay $65 to purchase the extended warranty if they don’t purchase it with the $40 coupon that was included in the Protab Package. Creative estimates that 45% of customers will use the $40 coupon to purchase an extended warranty.
Required:
1. & 2.
Indicated below whether each item is a separate performance obligation and allocate the transaction price of 120,000 Protab Packages to the separate performance obligations in the contract.
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