Question
Connie's Cupcake Shop and Jana's Cakes each operate a bakery close to each other in a small town in Florida. If Connie rents ovens
Connie's Cupcake Shop and Jana's Cakes each operate a bakery close to each other in a small town in Florida. If Connie rents ovens on her own, it will cost $45,000. If Jana rents ovens on her own, it will cost $60,000. If they consolidate baking operations and share ovens, the total cost will be $91,000. Read the requirements. Requirement 1. Calculate Connie's and Jana's respective cost of the shared ovens under the stand-alone cost-allocation method. Connie Jana Stand-alone Requirement 2. Calculate Connie's and Jana's respective cost of the shared ovens using the incremental cost-allocation method assuming (a) Connie is the primary party and (b) Jana is the primary party. Connie Jana Incremental Connie primary user Jana primary user Requirement 3. Calculate Connie's and Jana's respective cost of the shared ovens using the Shapley value method. Connie Jana Shapley Requirement 4. Which method would you recommend Connie and Jana use to share the cost of the ovens? Why? I would recommend the It is fairer than the likely more acceptable. which Given its simplicity, the is
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