The engineering firm Quartane charges 52,000 for a design study, commonly sold on its own at 30,000, and for the supervision of the related site work, a service it has never sold separately. It estimates the stand-alone selling price of the supervision at the expected cost of 25,000 plus a margin of 40% on cost (assumption chosen by management). The two services are distinct performance obligations. Determine the estimated stand-alone selling price of the supervision and the transaction price allocated to it.
- Total contract fee
- 52,000
- Observable stand-alone selling price of the study
- 30,000
- Expected cost of the supervision
- 25,000
- Margin on cost
- 40 %