Question

Objectives of Allocation

Samantha and Rashida are planning a trip to Padre Island, Texas, during spring break. Members of the varsity volleyball team, they are looking forward to four days of beach volleyball and parasailing. They will drive Samantha's car and estimate that they will pay the following costs during the trip:

Motel (4 nights at $145)	$580
Food (each)	155
Gas in total	126
Parasailing and equipment rental (each)	126

They have reservations at the SeaScape Motel, which charges $125 per night for a single, $145 per night for a double, and an additional $15 per night if a rollaway bed is added to a double room.

Samantha’s little sister, Kallie, wants to go along. She isn’t into sports but thinks that four days of partying and relaxing on the beach would be a great way to unwind from the rigors of school. She figures that she could ride with Samantha and Rashida and share their room.

Required:

1. Using incremental costs only, what would it cost Kallie to accompany Samantha and Rashida?
$

2. Using the benefits-received method, what would it cost Kallie to go on the trip? If required, round your intermediate calculations and final answer to the nearest cent.
$

Answer 1

	Following cost	Amnt($)
	Motel ( 4 Nights @$145)	580
	Food each	155
	Gas in Total	126
	Parasiling & Equipment rental each	126
	Use Incremental cost, What would be cost of
	Kallie??			Amnt($)
	Additional cost $ 15 per days * Number of days 4 $			60
	( rollway Bed)
	Add - Increse in Food cost			155
	Total additional cost - Kallie			215
	Incremental cost Analysis
Ans-1		Without consider Kallie cost$	With consider Kallie cost$	Incremental Cost$
	Motel ( 4 Nights @$145)	580	640	60
	Food each($155*2)	310	465	155
	Gas in Total	126	126	-
	Total	1,016	1,231	215	( as calculated above)
Ans-2	Benefit Received Method
	What would be cost with kallie go on Trip
		Cost($)	Numbr of Person	Amnt($)
	Motel ( 4 Nights @$145)	640	3	213	($640/3)
	Food each($155*2)	465	3	155	($465/3)
	Gas in Total	126	3	42	($126/3)
	Total cost benefit method			410