| Larkspur Company sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot. It offers two bundles with the following terms.
Larkspur Bundle A sells a tablet with 3 years of Internet service. The price for the tablet and a 3-year Internet connection service contract is $506. The standalone selling price of the tablet is $234 (the cost to Larkspur Company is $167). Larkspur Company sells the Internet access service independently for an upfront payment of $324. On January 2, 2017, Larkspur Company signed 90 contracts, receiving a total of $45,540 in cash.2.Larkspur Bundle B includes the tablet and Internet service plus a service plan for the tablet PC (for any repairs or upgrades to the tablet or the Internet connections) during the 3-year contract period. That product bundle sells for $612. Larkspur Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $155. Larkspur Company signed 190 contracts for Larkspur Bundle B on July 1, 2017, receiving a total of $116,280 in cash.
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