Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 15, Problem 15.23E
Allocation of common costs. Evan and Brett are students at Berkeley College. They share an apartment that is owned by Brett. Brett is considering subscribing to an Internet provider that has the following packages available:
| Package | Per Month |
| A. Internet access | $75 |
| B. Phone services | 25 |
| C. Internet access + phone services | 90 |
Evan spends most of his time on the Internet (“everything can be found online now”). Brett prefers to spend his time talking on the phone rather than using the Internet (“going online is a waste of time”). They agree that the purchase of the $90 total package is a “win–win” situation.
- 1. Allocate the $90 between Evan and Brett using (a) the stand-alone cost-allocation method, (b) the incremental cost-allocation method, and (c) the Shapley value method.
- 2. Which method would you recommend they use and why?
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Ben and Mike are students at Berkeley College. They share an apartment that is owned by Mike. Mike is considering subscribing to an Internet provider that has the following packages available:
Package
Per Month
A. Internet access
$60
B. Phone services
20
C. Internet access + phone services
75
Ben spends most of his time on the Internet ("everything can be found online now"). Mike prefers to spend his time talking on the phone rather than using the Internet ("going online is a waste of time"). They agree that the purchase of the $75 total package is a "win–win" situation.
Requirements
1.
Allocate the $75between Ben and Mike using (a) the stand-alone cost-allocation method, (b) the incremental cost-allocation method, and (c) the Shapley value method.
2.
Which method would you recommend they use and why?
Requirement 1. Allocate the $75between Ben and Mike using (a) the stand-alone cost-allocation method, (b) the…
David and Ed are students at Berkeley College. They share an
apartment that is owned by Ed. Ed is considering subscribing to
an Internet provider that has the following packages available:
Package
Per Month
A. Internet access
B. Phone services
C. Internet access + phone services
$
75
25
90
C
David spends most of his time on the
Internet ("everything can be found online now"). Ed
prefers to spend his time talking on the phone rather
than using the Internet ("going online is a waste of time"
They agree that the purchase of the $90 total package is
a "win-win" situation.
Requirements
1. Allocate the $90 between David and Ed using (a)
the stand-alone cost-allocation method, (b) the
incremental cost-allocation method, and (c) the
Shapley value method.
2. Which method would you recommend they use
and why?
David and Gary are students at Berkeley College. They share an apartment that is owned by
Gary. Gary is considering subscribing to an Internet provider that has the following
packages available:
Package
A. Internet access
B. Phone services
C. Internet access + phone services
(a) Stand-alone
(b) Incremental
David primary user
Gary primary user
Per Month
(c) Shapley
$
85
15
90
Requirement 1. Allocate the $90 between David and Gary using (a) the stand-alone cost-allocation method, (b) the incremental cost-allocation method, and (c) the Shapley value method. (Round
your answers to the nearest cent.)
Costs allocated to
David
Gary
C
David spends most of his time on the Internet ("everything can be found online now").
Gary prefers to spend his time talking on the phone rather than using the Internet ("going
online is a waste of time"). They agree that the purchase of the $90 total package is a
"win-win" situation.
Requirements
1. Allocate the $90 between David and Gary using (a) the…
Chapter 15 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 15 - Prob. 15.1QCh. 15 - Describe how the dual-rate method is useful to...Ch. 15 - How do budgeted cost rates motivate the...Ch. 15 - Give examples of allocation bases used to allocate...Ch. 15 - Why might a manager prefer that budgeted rather...Ch. 15 - To ensure unbiased cost allocations, fixed costs...Ch. 15 - Prob. 15.7QCh. 15 - What is conceptually the most defensible method...Ch. 15 - Distinguish between two methods of allocating...Ch. 15 - What are the challenges of using the incremental...
Ch. 15 - Prob. 15.11QCh. 15 - What is one key way to reduce cost-allocation...Ch. 15 - Describe how companies are increasingly facing...Ch. 15 - Distinguish between the stand-alone and the...Ch. 15 - Identify and discuss arguments that individual...Ch. 15 - Single-rate versus dual-rate methods, support...Ch. 15 - Single-rate method, budgeted versus actual costs...Ch. 15 - Dual-rate method, budgeted versus actual costs and...Ch. 15 - Support-department cost allocation; direct and...Ch. 15 - Support-department cost allocation, reciprocal...Ch. 15 - Direct and step-down allocation. E-books, an...Ch. 15 - Reciprocal cost allocation (continuation of...Ch. 15 - Allocation of common costs. Evan and Brett are...Ch. 15 - Allocation of common costs. Gordon Grimes, a...Ch. 15 - Revenue allocation, bundled products. Couture Corp...Ch. 15 - Allocation of common costs. Jim Dandy Auto Sales...Ch. 15 - Single-rate, dual-rate, and practical capacity...Ch. 15 - Prob. 15.28PCh. 15 - Fixed-cost allocation. Central University...Ch. 15 - Allocating costs of support departments; step-down...Ch. 15 - Support-department cost allocations;...Ch. 15 - Common costs. Tate Inc. and Booth Inc. are two...Ch. 15 - Prob. 15.33PCh. 15 - Support-department cost allocations;...Ch. 15 - Revenue allocation, bundled products. Boca Resorts...Ch. 15 - Support-department cost allocations; direct,...
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