Question

In: Accounting

C. Ideal AA Garment and Sha Taylor are two clothing companies that are considering leasing a...


C. Ideal AA Garment and Sha Taylor are two clothing companies that are considering leasing a dyeing machine together. The companies estimated that in order to meet production, Ideal AA needs the machine for 900 hours and Shah needs it for 600 hours. If each company rents the machine on its own, the fee will be RM40 per hour of usage. If they rent the machine together, the fee will decrease to RM32 per hour of usage.


Required:

a. Calculate Ideal AA and Shah respective share of fees under the stand-alone cost-allocation.

b. Calculate Ideal AA and Shah respective share of fees using the incremental cost-allocation method. Assume Ideal AA to be the primary party.

(3 ½ marks

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Expert Solution

ekkarill92 answered 1 year ago
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