Jenny's Cupcake Shop and Carrie's Cakes each operate a bakery close to each other in a small town in Florida. If Jenny rents ovens on her own, it will cost $36,000. If Carrie rents ovens on her own, it will cost $52,000. If they consolidate baking operations and share ovens, the total cost will be $66,000. Read the requirements. Requirements 1. Calculate Jenny's and Carrie's respective cost of the shared ovens under the stand-alone cost-allocation method. 2. Calculate Jenny's and Carrie's respective cost of the shared ovens using the incremental cost-allocation method assuming (a) Jenny is the primary party and (b) Carrie is the primary party. 3. Calculate Jenny's and Carrie's respective cost of the shared ovens using the Shapley value method. 4. Which method would you recommend Jenny and Carrie use to share the cost of the ovens? Why? х

Jenny's Cupcake Shop and Carrie's Cakes each operate a bakery close to each other in a small town in Florida. If Jenny rents ovens on her own, it will cost $36,000. If Carrie rents ovens on her own, it will cost $52,000. If they consolidate baking operations and share ovens, the total cost will be $66,000. Read the requirements. Requirements 1. Calculate Jenny's and Carrie's respective cost of the shared ovens under the stand-alone cost-allocation method. 2. Calculate Jenny's and Carrie's respective cost of the shared ovens using the incremental cost-allocation method assuming (a) Jenny is the primary party and (b) Carrie is the primary party. 3. Calculate Jenny's and Carrie's respective cost of the shared ovens using the Shapley value method. 4. Which method would you recommend Jenny and Carrie use to share the cost of the ovens? Why? х

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 5CE: Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each...

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Question

Jenny's Cupcake Shop and Carrie's Cakes each operate a bakery close to each other in a small town in Florida. If Jenny rents ovens
on her own, it will cost $36,000. If Carrie rents ovens on her own, it will cost $52,000. If they consolidate baking operations and
share ovens, the total cost will be $66,000.
Read the requirements.
Requirements
1.
Calculate Jenny's and Carrie's respective cost of the shared ovens under the stand-alone cost-allocation
method.
2. Calculate Jenny's and Carrie's respective cost of the shared ovens using the incremental cost-allocation method
assuming (a) Jenny is the primary party and (b) Carrie is the primary party.
3. Calculate Jenny's and Carrie's respective cost of the shared ovens using the Shapley value method.
4. Which method would you recommend Jenny and Carrie use to share the cost of the ovens? Why?
- X

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Requirement 4. Which method would you recommend Jenny and Carrie use to share the cost of the ovens? Why?
I would recommend the
It is fairer than the
which
is likely more acceptable.
Given its simplicity, the

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