=+13-23 K Allocation of common costs OBJECTIVE 4 Kevin and Matt are students at Deakin University. They share an apartment in St Kilda that is owned by Matt. Matt is considering subscribing to an internet provider that has the following packages available:

Package Per month A Internet access $60 B Telephone services $15 C Internet access + telephone services $65 Kevin spends most of his time on the internet (‘everything can now be found online’). Matt prefers to spend his time talking on the telephone rather than using the internet (‘going online is a waste of time’). They agree that the purchase of the $65 total package is a ‘win–win’ situation.

Required 1 Allocate the $65 between Kevin and Matt using:

(a) the stand-alone cost-allocation method,

(b) the incremental cost-allocation method and

(c) the Shapley value method.