QUESTION 1 :

Mr. Brown and Mr. Black own cleaning companies. They are considering renting a small sweeper to share between their two separate businesses. Mr. Brown requires the machine for a total of 900 hours and Mr. Black 600 hours. If each company rents the machine on their own, the hourly rate is $40. If they rent the machine together the hourly rate drops to $32.

a) Calculate Mr. Browns and Mr. Blacks respective share of the cost using the stand-alone method.

b) Calculate Mr. Browns and Mr. Blacks respective share of the cost using the incremental method. Assume Mr. Brown to be the primary party.

Question 2)

E-Mark, an online store, has two operating divisions Corporate Sales and Consumer Sales and two support divisions Admin and IT. Each operating division operates independently. E-Mark uses number of employees to allocate Admin costs and processing time to allocate IT costs. The following data are available for the month:

					SUPPORT DEPT		OPERATING DEPT
					Admin	IT	Corp Sales	Cons. Sales
Budgeted costs incurred before
	any interdivision allocations				$85,000	$200,000	$1,000,000	$500,000
Admin budgeted # of employees
	deployed					20	40	40
IT budgeted # of processing time
	deployed (minutes)				300		2,000	1,700

Using the reciprocal method, allocate the support department costs.