Question: QUESTION ONE (20 Marks) (5 Marks) a) Differentiate between traceable and common costs. b) Assume that you are living in Dar es Salaam, Tanzania, and

QUESTION ONE (20 Marks) (5 Marks) a)

QUESTION ONE (20 Marks) (5 Marks) a) Differentiate between traceable and common costs. b) Assume that you are living in Dar es Salaam, Tanzania, and your friend, Safari, in Rwanda invites you to visit him. Safari is so generous, he has promised you to pay for your flight to Kigali to see him. The round-trip Dar - Kigali airfare costs $1,200. A week later, your other friend Mukai, from Nairobi hears from Safari that you will be going to Kigali. She also decides to invite you to come to see her in Nairobi and offers to reimburse you as well. The Dar - Nairobi round-trip airfare costs $800. You decide to combine the two trips into one big trip: Dar - Nairobi - Kigali - Dar that will cost $1,500 in airfare and save them their $500 had it been that you had visited them separately. Required: Using the stand-alone method, the incremental method, and the Shapley value method of allocating common costs, show how much cost of the $1500 do you allocate to each of them? (15 Marks)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!