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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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