A Company Sells a Software Suite That Includes a Word

Multiple Choice

A company sells a software suite that includes a word processor and spreadsheet applications. The suite sells for $250 and the items are also available separately for $200 (spreadsheet) and $170 (word processor) . The spreadsheet app is by far the best seller of the standalone product sales. Using the incremental-revenue allocation method and assuming that the spreadsheet is the primary product, how much of the $250 revenue from the bundled product sale would be allocated to the spreadsheet and to the word processing products?

A) $200 of revenue for the spreadsheet and $50 for the word processor
B) $200 of revenue for the spreadsheet and $0 for the word processor
C) $135 of revenue for the spreadsheet and $115 for the word processor
D) $250 of revenue for the spreadsheet and $0 for the word processor