Calculate jeana and jody respective cost of the shared

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Reference no: EM133428152

Question: Jeana's Cupcake Shop and Jody's Cakes each operate a bakery close to each other in a small town in Florida. If Jeana rents ovens on her own, it will cost $40,000. If Jody rents ovens on her own, it will cost $60,000. If they consolidate baking operations and share ovens, the total cost will be $80,000.

1. Calculate Jeana's and Jody's respective cost of the shared ovens under the stand-alone cost-allocation method.

2. Calculate Jeana's and Jody's respective cost of the shared ovens using the incremental cost-allocation method assuming (a) Jeana is the primary party and (b) Jody is the primary party.

3. Calculate Jeana's and Jody's respective cost of the shared ovens using the Shapley value method.

4. Which method would you recommend Jeana and Jody use to share the cost of the ovens? Why?

Reference no: EM133428152

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