Stand Alone Method | Stand-alone cost-allocation method—determines the weights for cost | |||||||
allocation by considering each user of the cost object as a separate entity to determine the cost-allocation weights. | ||||||||
Cost | % of cost | |||||||
Safari(Rwanda) | $1,200 | 60% | (1200/2000) | |||||
Mukai(Nairobi) | $800 | 40% | (800/2000) | |||||
$2,000 | ||||||||
Combined Cost | $1,500 | |||||||
Allocated to Safari | $900 | (1500*60%) | ||||||
Allocated to Mukai | $600 | (1500*40%) | ||||||
Increamental Cost apporach | Incremental cost-allocation method ranks the individual users of a cost object in the order of users most | |||||||
responsible for a common cost and then uses this ranking to allocate the cost among the users. | ||||||||
Cost | Cost | |||||||
Safari(Rwanda) - Primary | $1,200 | Safari(Rwanda) - Increamental | $700 | (1500-800) | ||||
Mukai(Nairobi) - increamental | $300 | (1500-1200) | Mukai(Nairobi) - Primary | $800 | ||||
$1,500 | $1,500 | |||||||
Shapley value method | ||||||||
Safari(Rwanda) - Primary | (Cost allocated as primary user+cost allocated as increamental user)/2 | |||||||
Mukai(Nairobi) - increamental | (Cost allocated as primary user+cost allocated as increamental user)/2 | |||||||
Safari(Rwanda) - Primary | (1200+700)/2 | $950 | ||||||
Mukai(Nairobi) - increamental | (300+800)/2 | $550 | ||||||
$1,500 |
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b) Assume that you are living in Dar es Salaam, Tanzania, and your friend, Safari, in...