Tack Inc. and Bick Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tack rents the machine on its own, it will cost $35,000. If Bick rents the machine alone, it will cost $25,000. If they rent the machine together, the cost will decrease to $57,000. Read the requirements. Requirement 1. Calculate Tack's and Bick's respective share of fees under the stand-alone cost-allocation method. Tack $ 33,250 $ Shapley Stand-alone Requirement 2. Calculate Tack's and Bick's respective share of fees using the incremental cost-allocation method assuming (a) Tack is the primary party (b) Bick is the primary party. Tack Bick 23,750 Incremental Tack primary user $ Bick primary user $ 32,000 $ Requirement 3. Calculate Tack's and Bick's respective share of fees using the Shapley value method. Tack 30000 Bick 35,000 $ 22,000 25,000 Bick 28500
Tack Inc. and Bick Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tack rents the machine on its own, it will cost $35,000. If Bick rents the machine alone, it will cost $25,000. If they rent the machine together, the cost will decrease to $57,000. Read the requirements. Requirement 1. Calculate Tack's and Bick's respective share of fees under the stand-alone cost-allocation method. Tack $ 33,250 $ Shapley Stand-alone Requirement 2. Calculate Tack's and Bick's respective share of fees using the incremental cost-allocation method assuming (a) Tack is the primary party (b) Bick is the primary party. Tack Bick 23,750 Incremental Tack primary user $ Bick primary user $ 32,000 $ Requirement 3. Calculate Tack's and Bick's respective share of fees using the Shapley value method. Tack 30000 Bick 35,000 $ 22,000 25,000 Bick 28500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Tack Inc. and Bick Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tack rents the
machine on its own, it will cost $35,000. If Bick rents the machine alone, it will cost $25,000. If they rent the machine together, the cost will
decrease to $57,000.
Read the requirements.
Requirement 1. Calculate Tack's and Bick's respective share of fees under the stand-alone cost-allocation method.
Tack
$ 33,250 $
Shapley
Stand-alone
Requirement 2. Calculate Tack's and Bick's respective share of fees using the incremental cost-allocation method assuming (a) Tack is the
primary party (b) Bick is the primary party.
Tack
Bick
Tack
23,750
Incremental
Tack primary user
$ 35,000 $
22,000
Bick primary user
$ 32,000 $ 25,000
Requirement 3. Calculate Tack's and Bick's respective share of fees using the Shapley value method.
30000
Bick
Bick
28500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbdb6b7e6-6955-49fa-a267-fe04f76ffeac%2Fb2ce01de-23bc-4969-b363-1ca13158b4ad%2Fm3rv74f_processed.png&w=3840&q=75)
Transcribed Image Text:Tack Inc. and Bick Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tack rents the
machine on its own, it will cost $35,000. If Bick rents the machine alone, it will cost $25,000. If they rent the machine together, the cost will
decrease to $57,000.
Read the requirements.
Requirement 1. Calculate Tack's and Bick's respective share of fees under the stand-alone cost-allocation method.
Tack
$ 33,250 $
Shapley
Stand-alone
Requirement 2. Calculate Tack's and Bick's respective share of fees using the incremental cost-allocation method assuming (a) Tack is the
primary party (b) Bick is the primary party.
Tack
Bick
Tack
23,750
Incremental
Tack primary user
$ 35,000 $
22,000
Bick primary user
$ 32,000 $ 25,000
Requirement 3. Calculate Tack's and Bick's respective share of fees using the Shapley value method.
30000
Bick
Bick
28500
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