Question 2

Catherine Zhang, a final-year undergraduate student at RMIT University received an invitation to visit a prospective employer in Singapore. A few days later, she received an invitation from a prospective employer in Hong Kong. She decided to combine her visits, travelling from Melbourne to Singapore, Singapore to Hong Kong and Hong Kong to Melbourne.

Regular trip fares with no stopovers:

Melbourne to Singapore: $1400

Melbourne to Hong Kong: $1400

Zhang paid $1800 for her three-leg flight (Melbourne to Singapore, Singapore to Hong Kong and Hong Kong to Melbourne). In addition, she paid $30 for a taxi from her home to Melbourne airport and another $30 for a taxi from Melbourne airport to her home when she returned.

Required:

(a) How should Zhang allocate the $1800 airfare between the employers in Singapore and Hong Kong? She allocations using both stand alone cost allocation method and incremental cost allocation (first using Singapore employer as the primary party and the using Hong Kong employer as the primary party). Show the actual amount you would allocate and give reasons for your allocations.

(b)How should Zhang allocate the $60 taxi fares at the Melbourne end of her travels? Show the actual amounts you would allocate and give reasons for your allocations. Hint: you may answer this part of the question using the method noted in requirement (a) above.