Question

Neakanie Industries sells specialized mountain bikes. Each specialized bike purchased includes free maintenance service for 12 months. The price of the specialized bike is $700. When sold separately, a maintenance contract is $200 and a comparable but non- specialized bike is $600. If Neakanie sold 3 bikes on December 1, how much total revenue would the company recognize on December 31?

Answer 1

Answer:

total revenue from sale = $525

Explanation:

given data

free maintenance service = 12 months

specialized bike = $700

maintenance contract  = $200

specialized bike = $600

to find out

total revenue

solution

we get  here total revenue that is express as

total revenue = specialized bike × ( specialized bike ÷ (specialized bike  + maintenance contract ) )   ...............1

put here value we get

total revenue from sale = $700 × $\frac{600}{600+ 200}$

total revenue from sale = $525