Incremental allocations and Shapley values in service firms Deforester Company is a marketing service firm. It is sending a team of marketing personnel to conventions in New York City and Atlanta. At each convention the staff will prepare displays and provide demonstrations of various company products for two different clients. The conventions are three days each with only one day in between them. The direct costs of the conventions for lodging, food, cabs fares, participations fees, and personnel costs are $7,800 for the New York convention and $6,400 for Atlanta.

If the conventions had been separate, the travel and transportation costs for staff and equipment would have been $3,400 for New York and $2,600 for Atlanta. By taking the trips in one big cycle the combined cost is $4,800. Clients are billed direct charges, plus travel, plus 15 percent of all costs and charges.

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REQUIRED a. Calculate the cost of travel and transportation charged to each client using incremental cost allocations. b. Calculate the cost of travel and transportation charged to each client using Shapley value allocations. c. Calculate all possible charges to each of the clients for the conventions using the data you computed above.