Mr. Smith and Mrs. Jones each own their own cleaning companies. They are considering renting a commercial vacuum cleaner to share between their two businesses. Mr Smith requires the vacuum for a total of 600 hours and Mrs. Jones would use the vacuum for 400 hours. If each of the cleaning companies rents their own vacuum, the cost would be $50 per hourIf they rent the machine together the hourly rate drops to $40.

REQUIRED :

a. Calculate Mr. Smith's and Mrs. Jones's respective share of the cost using the stand-alone method.

b. Calculate Mr. Smith's and Mrs. Jones's respective share of the cost using the incremental method. Assume Mr. Smith to be the primary party.

Answer rating: 100% (QA)

a StandAlone Method If Mr Smith and Mrs Jones each rent their own vacuum cleaners the cost pe... View the full answer