Page 170 - FR Integrated Workbook 2018-19

Chapter 12

Example 3

Combined sale

On 1 September 20X7 Selby sold a machine including two year’s technical
support for $396,000. It usually sells the machine for $300,000 but does not
sell technical support for this machine as a stand-alone product. Other
support services offered by Selby earn a mark-up of 40%. It is expected that
the technical support will cost Selby $50,000 per year.

Required:

How much revenue was earned by Selby in the year to 31 December
20X7?

Solution

Normal sales price
$

Machine 300,000
Support $50,000 × 140% × 2 years 140,000

——–—
Total sales at full price 440,000

——–—

Actual sales price of $396,000 represents a discount of $44,000, or 10%.

This discount of 10% is applied evenly between the machine and support to
give net selling prices as follows:

$
Machine 300,000 × 90% 270,000
Support 140,000 × 90% 126,000

——–—
Total sales 396,000

——–—

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