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 15.32P

Common costs. Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tate rents the machine on its own, it will cost $26,000. If Booth rents the machine alone, it will cost $14,000. If they rent the machine together, the cost will decrease to $36,000.

1. Calculate Tate’s and Booth’s respective share of fees under the stand-alone cost-allocation method.
Required
2. Calculate Tate’s and Booth’s respective share of fees using the incremental cost-allocation method assuming (a) Tate is the primary party and (b) Booth is the primary party.
3. Calculate Tate’s and Booth’s respective share of fees using the Shapley value method.
4. Which method would you recommend Tate and Booth use to share the fees?

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Chapter 15, Problem 15.31P

Chapter 15, Problem 15.33P

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During its first month of operation, Peter's Auto Supply Corporation, which specializes the sale of auto equipment and supplies, completed the following transactions. July Transactions July 1 Issued Common Stock in exchange for $100,000 cash. July 1 Paid $4,000 rent for the months of July and August July 2 Paid the insurance company $2,400 for a one year insurance policy, beginning July 1. July 5 Purchased inventory on account for $35,000 (Assume that the perpetual inventory system is used.) July 6 Borrowed $36,500 from a local bank and signed a note. The interest rate is 10%, and principal and interest is due to be repaid in six months. July 8 Sold inventory on account for $17,000. The cost of the inventory is $7,000. July 15 Paid employees $6,000 salaries for the first half of the month. July 18 Sold inventory for $15,000 cash. The cost of the inventory was $6,000. July 20 Paid $15,000 to suppliers for the inventory purchased on January 5. July 26…

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Chapter 15 Solutions

Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)

Ch. 15 - Prob. 15.1Q Ch. 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. 15.7Q Ch. 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. 15.11Q Ch. 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. 15.28P Ch. 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. 15.33P Ch. 15 - Support-department cost allocations;...Ch. 15 - Revenue allocation, bundled products. Boca Resorts...Ch. 15 - Support-department cost allocations; direct,...

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