HORNGREN COST ACCT NON-MAJORS W/ACCESS
17th Edition
ISBN: 9781323703748
Author: Datar
Publisher: Pearson Custom Publishing
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 15, Problem 15.32P
Common costs. Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tate rents the machine on its own, it will cost $26,000. If Booth rents the machine alone, it will cost $14,000. If they rent the machine together, the cost will decrease to $36,000.
- 1. Calculate Tate’s and Booth’s respective share of fees under the stand-alone cost-allocation method.
Required
- 2. Calculate Tate’s and Booth’s respective share of fees using the incremental cost-allocation method assuming (a) Tate is the primary party and (b) Booth is the primary party.
- 3. Calculate Tate’s and Booth’s respective share of fees using the Shapley value method.
- 4. Which method would you recommend Tate and Booth use to share the fees?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tate rents the machine on its own, it will cost $26,000. If Booth rents the machine alone, it will cost $14,000. If they rent the machine together, the cost will decrease to $36,000.
Q. Calculate Tate’s and Booth’s respective share of fees under the stand-alone cost-allocation method.
Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tate rents the machine on its own, it will cost $26,000. If Booth rents the machine alone, it will cost $14,000. If they rent the machine together, the cost will decrease to $36,000.
Q. Calculate Tate’s and Booth’s respective share of fees using the incremental cost-allocation method assuming (a) Tate is the primary party and (b) Booth is the primary party.
Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tate rents the machine on its own, it will cost $26,000. If Booth rents the machine alone, it will cost $14,000. If they rent the machine together, the cost will decrease to $36,000.
Q. Calculate Tate’s and Booth’s respective share of fees using the Shapley value method
Chapter 15 Solutions
HORNGREN COST ACCT NON-MAJORS W/ACCESS
Ch. 15 - Prob. 15.1QCh. 15 - Describe how the dual-rate method is useful to...Ch. 15 - How do budgeted cost rates motivate the...Ch. 15 - Give examples of allocation bases used to allocate...Ch. 15 - Why might a manager prefer that budgeted rather...Ch. 15 - To ensure unbiased cost allocations, fixed costs...Ch. 15 - Prob. 15.7QCh. 15 - What is conceptually the most defensible method...Ch. 15 - Distinguish between two methods of allocating...Ch. 15 - What are the challenges of using the incremental...
Ch. 15 - Prob. 15.11QCh. 15 - What is one key way to reduce cost-allocation...Ch. 15 - Describe how companies are increasingly facing...Ch. 15 - Distinguish between the stand-alone and the...Ch. 15 - Identify and discuss arguments that individual...Ch. 15 - Single-rate versus dual-rate methods, support...Ch. 15 - Single-rate method, budgeted versus actual costs...Ch. 15 - Dual-rate method, budgeted versus actual costs and...Ch. 15 - Support-department cost allocation; direct and...Ch. 15 - Support-department cost allocation, reciprocal...Ch. 15 - Direct and step-down allocation. E-books, an...Ch. 15 - Reciprocal cost allocation (continuation of...Ch. 15 - Allocation of common costs. Evan and Brett are...Ch. 15 - Allocation of common costs. Gordon Grimes, a...Ch. 15 - Revenue allocation, bundled products. Couture Corp...Ch. 15 - Allocation of common costs. Jim Dandy Auto Sales...Ch. 15 - Single-rate, dual-rate, and practical capacity...Ch. 15 - Prob. 15.28PCh. 15 - Fixed-cost allocation. Central University...Ch. 15 - Allocating costs of support departments; step-down...Ch. 15 - Support-department cost allocations;...Ch. 15 - Common costs. Tate Inc. and Booth Inc. are two...Ch. 15 - Prob. 15.33PCh. 15 - Support-department cost allocations;...Ch. 15 - Revenue allocation, bundled products. Boca Resorts...Ch. 15 - Support-department cost allocations; direct,...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn set from an outside vendor for $15 per set. Modern Furniture’s chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the firm money. Additional information shows that if Modern furniture’s were to manufacture the cushions, the materials cost would be $6 and the labor cost would be $4 per set and that it would have to purchase cutting and sewing equipment, which would add $10,000 to annual fixed costs. Calculate Amount company will save if company make 10,000 cushions What amount should have been inccrued if company purchase the units what amount should have been inccrued if company produce the unitsarrow_forwardCommon costs. Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tate rents the machine on its own, it will cost $26,000. If Booth rents the machine alone, it will cost $14,000. If they rent the machine together, the cost will decrease to $36,000.arrow_forwardAssume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn set from an outside vendor for $30 per set. Modern Furniture’s chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the firm money. Additional information shows that if Modern furniture’s were to manufacture the cushions, the materials cost would be $16 and the labor cost would be $10 per set and that it would have to purchase cutting and sewing equipment, which would add $25,000 to annual fixed costs. Required Computation for 10,000 units What amount should have been inccrued if company produce 10,000 units What amount should have been inccrued if company purhcase 10,000 units from outside What amount company save if company make 10,000 cushionsarrow_forward
- The Lombard Company produces and sells office-space dehumidifiers to companies that own or rent office space. (a) Lombard’s materials and labor costs for producing the dehumidifiers are $3,000 per unit and the fixed costs of its dehumidifier production plant are $1.85 million. If Lombard sells a dehumidifier for $5,000 per unit, what is its percent contribution margin? Show your work. (b) If Lombard used revenue-based compensation to pay its sales force, what would be a salesperson’s sales credit for selling 20 dehumidifiers at a price of $4,500? Show your work. (c) If Lombard used the profit-based compensation method described in the course to pay its sales force and sets the dehumidifier’s target price at $5,000 per unit, what would be a salesperson’s sales credit for selling 20 dehumidifiers at a price of $4,500? Show your work. (d) Explain the benefit to Lombard’s management of using the profit-based compensation method of Part (c) over revenue-based compensation for…arrow_forwardSan Juan, Incorporated, is considering two alternatives: A and B. The costs associated with the alternatives are listed below: Alternative A Alternative B Material costs $ 35,000 $ 57,000 Processing costs 36,000 57,000 Building costs 12,000 28,000 Equipment rental 19,000 19,000 Are the materials costs and processing costs differential in the choice between alternatives A and B? Multiple Choice Neither materials costs nor processing costs are differential. Both materials costs and processing costs are differential. Only processing costs are differential. Only materials costs are differential.arrow_forwardWhat is Adam’s current level of fixed costs? (Use the rounded contribution margin per unit calculated in the previous part.) Current level of fixed costs $_____________ AdamGranger operates a kiosk in downtown Chicago, at which he sells one style of baseball hat. He buys the hats from a supplier for $14 and sells them for $20. Adam’s current breakeven point is 15,000 hats per year. What is Adam’s current level of fixed costs? (Use the rounded contribution margin per unit calculated in the previous part. contribution margin per unit IS $6.00arrow_forward
- If the company buys the part it will still have to pay $1.50 per unit for the fixed manufacturing overhead costs. Instructions: Evaluate the two options and recommend Dala Furniture Company whether it should make or buy the 25,000 units of part D.arrow_forwardRelevant and irrelevant costs. Answer the following questions. Robinson Computers makes 5,700 units of a circuit board, CB76, at a cost of $230 each. Variable cost per unit is $180 and fixed cost per unit is $50. Peach Electronics offers to supply 5,700 units of CB76 for $210. If Robinson buys from Peach, it will be able to save $20 per unit in fixed costs but continue to incur the remaining $30 per unit. Should Robinson accept Peach’s offer? Explain. RT Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information:arrow_forwardA company is negotiating with a potential supplier for the purchase of 100,000 widgets. The company estimates that the supplier’s variable costs are $5 per unit andthat the fixed costs, depreciation, overhead, and so on, are $50,000. The supplierquotes a price of $10 per unit. Calculate the estimated average cost per unit. do youthink $10 is too much to pay? Could the purchasing department negotiate a betterprice? How?arrow_forward
- Biz Tech Inc. is currently purchasing a standard part for $52 per unit which is used for manufacturing different types of appliances. The company is operating at 70% capacity and can make the part at a cost of $65 per unit which include an allocated fixed cost per unit of $11. If the company decide to use the idle manufacturing space to produce 30,000 units of parts, what would be the amount of increase or decrease in differential costs from making the part rather than purchasing? Group of answer choices Cost would be decreased or saved by $60,000 Cost would be increased by $150,000 Cost would be decreased by $150,000 Cost would be increased by $60,000arrow_forwardMeg's Manufacturing Company can make 211 units of a component part for variable costs of $159,896 and fixed costs of $32,104. The compnay decides the buy the part externally instead for $153,734 and $4,789 of the fixed costs will be avoided. How much will net income increase or decrease? If net income increases, make your answer positive; If net income decreases, put a (-) negative sign in front of the answer. Round your answer to the nearest whole dollar and do not type the dollar sign.arrow_forwardBiz Tech Inc. is currently purchasing a standard part for $50 per unit which is used for manufacturing different types of appliances. The company is operating at 70% capacity and can make the part at a cost of $58 per unit which include an allocated fixed cost per unit of $13. If the company decide to use the idle manufacturing space to produce 15,000 units of parts, what would be the amount of increase or decrease in differential costs from making the part rather than purchasing? Group of answer choices Cost would be decreased by $120,000 Cost would be decreased or saved by $75,000 Cost would be increased by $120,000 Cost would be increased by $75,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY