Question
Jeana's Cupcake Shop and Jody's Cakes each operate a bakery close to each other in a small town in Florida. If Jeana rents ovens on
Jeana's Cupcake Shop and Jody's Cakes each operate a bakery close to each other in a small town in Florida. If
Jeana rents ovens on her own, it will cost $40,000. If Jody rents ovens on her own, it will cost $60,000. If they consolidate baking operations and share ovens, the total cost will be $80,000.
Requirement 1. Calculate
Jeana's and Jody's respective cost of the shared ovens under the stand-alone cost-allocation method.
Jeana | Jody | |
---|---|---|
Stand-alone | 32000 | 48000 |
Requirement 2.
Calculate Jeana's and Jody's respective cost of the shared ovens using the incremental cost-allocation method assuming (a)Jeana is the primary party and (b)Jody is the primary party.
| Jeana | Jody |
---|---|---|
Incremental | ||
Jeana primary user |
|
|
Jody primary user |
|
|
Thank you
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