Question

Bob and Evan are students at Berkeley College They share an apartment that is Bob spends most o s imeonnheimem e m-an ·On mre owned by Evan Evan is considering subscribing to an Internet provider that has now) Evan prefers to spend his time taking on the phone rather than using the the following packages available Package A. Internet access B. Phone services C. Internet access phone services Internet ('going online is a waste of time") They agree Ihat the purchase of the $70 total package is a "win-win" situation. Requirements 1. Allocate the $70 between Bob and Evan using (a) the stand-alone cost Per Month S 60 allocation method, (b) the incremental cost-allocation method, and (c) the Shapley value method Which method would you recommend they use and why? 20 70 2. Requirement 1. Allocate the $70 between Bob and Evan using (a) the stand-alone cost-allocation method, (b) the incremental cost-allocation method, and (c) the Shapley value method. Round your answers to the nearest cent) Costs allocated to Bob Evan (a) Stand-alone (b) Incremental Bob primary user Evan primary user (c) Shapley Requirement 2. Which method would you recommend they use and why? I would recommend the Enter any number in the edit fieids and then continue to the next question.

Answer 1

Internet Access		$60
Phone services		$20
Both		$70
Standalone		Internet	Phone
		0.75	0.25
		60/80	20/80
Cost Allocated		$52.50	$17.50	ANS
b.)
Incremental
Bob Primary User		$60.00	$10.00	ANS
Evan Primary User		$50.00	$20.00	ANS
c.)
Shapely
Bob Primary User		$60.00	$10.00
Evan Primary User		$50.00	$20.00
Total		$110.00	$30.00
Cost Allocated		$55.00	$15.00	ANS
d.)
I would recommend the Shapley Cost allocation method
It is Fairer than the Incremental Cost Allocation
It allocates costs in a manner that is close to the costs allocated under the STANDALONE COST allocation method

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