Deloitte Trueblood Case 12-04

Topics: Price, Sales, Equals sign Pages: 1 (270 words) Published: November 13, 2012
Professional Accounting I
Assignment #2

1. For the equipment Hemo-Tech should use its best estimate of selling price. Since it does not have a price on its own and the two competitors’ sell a different model or the same model to a different set of customers, it must use its best estimate according to 605-25-30-6C. Since the cost to manufacture the equipment including labor, materials, and allocated R&D is known, as well as an estimated markup based on its history of margins as well as the added benefits of the new model, a reasonable estimate can be made.

2. For the discount on future supplies Hemo-Tech should use vendor specific objective evidence for pricing the discount. This is because 605-25-30-6A identifies that the price of the deliverable is the price when it is sold separately. Since Hemo-Tech sells the boxes of supplies separately for $3,000, then this is the price at which the discount should be applied.

3. Screen and report services should be priced using third-party evidence. Since Hemo-Tech has a lot of variance in sale price related to the amount of equipment sold to a buyer, they cannot use VSOE, and instead must use third-party evidence. According to 605-25-30-6B, the selling price should be equal to a competitor’s selling price that sells similar services to similar customers on a standalone basis. Since it has two competitors which sell services for Hemo-Tech’s machines on a standalone basis, it should use these amounts to determine a price for its services.
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