Thelma and Louise operate businesses in downtown Lincoln. Three joint businesses share one building. Thelma operates a bakery. Her current rent is $2,200 per month, and she sells a variety of baked goods that are divided into three divisions. Cakes, Cookies, and Pastries. The breakout of the average revenue per one unit is Cakes - $45, 1 Dozen Cookes - $12, 6 Pastries - $18. Louise operates a card and gift shop. Her current rent is $1,500 per month, and she has broken her business into three divisions as well: Cards, Ceramics, and Frames. She typically sells a package of cards for $5, an average ceramic sells for $25, and the average frame sells for $15. Currently, Thelma rents the left section, and Louise rents the right section. Both sections are equal in square footage. The middle section just became available, and the ladies are considering renting it and sharing it to expand their current operations. The middle section is quite a bit larger and would rent for $3,000 per month. In your calculations, do not round any intermediary calculations and round your final answer to the nearest dollar for the rent and nearest cent for the revenue. Instructions
a. If Thelma and Louise rent the middle section and divide the cost using the stand-alone method, how much cost would be allocated to each?
b. If Thelma and Louise rent the middle section and divide the cost using the incremental method, how much cost would be allocated to each? (rank the cost by who currently pays the most rent)
c. Calculate the differences in allocated cost between the stand-alone method and the incremental method.
d.Which method would you suggest to Thelma and Louise to allocate the additional cost of renting the middle section?
e. Thelma and Louise decided to put together a few options for bundled deals for the customers.
1) The customer would receive a dozen cookies, a package of cards, and a frame for $30.
2) The customer would receive a cake and a ceramic for $60.
3) The customer would receive a six-pack of pastries, a dozen cookies, and a package of cards for $30. Using the stand-alone method of allocating the transaction price of the bundles, how much revenue will Thelma receive, and how much revenue will Louise receive?
f. Using the same options as part (e), recalculate the division of revenues to Thelma and Louise, using the incremental method. Rank the products based on individual selling prices.
g. Which method would more accurately represent a fair division of revenue for Thelma and Louise.

Question

Thelma and Louise operate businesses in downtown Lincoln. Three joint businesses share one building. Thelma operates a bakery. Her current rent is $2,200 per month, and she sells a variety of baked goods that are divided into three divisions. Cakes, Cookies, and Pastries. The breakout of the average revenue per one unit is Cakes - $45, 1 Dozen Cookes - $12, 6 Pastries - $18. Louise operates a card and gift shop. Her current rent is $1,500 per month, and she has broken her business into three divisions as well: Cards, Ceramics, and Frames. She typically sells a package of cards for $5, an average ceramic sells for $25, and the average frame sells for $15. Currently, Thelma rents the left section, and Louise rents the right section. Both sections are equal in square footage. The middle section just became available, and the ladies are considering renting it and sharing it to expand their current operations. The middle section is quite a bit larger and would rent for $3,000 per month. In your calculations, do not round any intermediary calculations and round your final answer to the nearest dollar for the rent and nearest cent for the revenue. Instructions
a. If Thelma and Louise rent the middle section and divide the cost using the stand-alone method, how much cost would be allocated to each?
b. If Thelma and Louise rent the middle section and divide the cost using the incremental method, how much cost would be allocated to each? (rank the cost by who currently pays the most rent)
c. Calculate the differences in allocated cost between the stand-alone method and the incremental method.
d.Which method would you suggest to Thelma and Louise to allocate the additional cost of renting the middle section?
e. Thelma and Louise decided to put together a few options for bundled deals for the customers. 
1) The customer would receive a dozen cookies, a package of cards, and a frame for $30. 
2) The customer would receive a cake and a ceramic for $60. 
3) The customer would receive a six-pack of pastries, a dozen cookies, and a package of cards for $30. Using the stand-alone method of allocating the transaction price of the bundles, how much revenue will Thelma receive, and how much revenue will Louise receive? 
f. Using the same options as part (e), recalculate the division of revenues to Thelma and Louise, using the incremental method. Rank the products based on individual selling prices. 
g. Which method would more accurately represent a fair division of revenue for Thelma and Louise.

Quizplus · Accepted Answer

The Answer of Thelma and Louise operate businesses in downtown Lincoln. Three joint businesses share one building. Thelma operates a bakery. Her current rent is $2,200 per month, and she sells a variety of baked goods that are divided into three divisions. Cakes, Cookies, and Pastries. The breakout of the average revenue per one unit is Cakes - $45, 1 Dozen Cookes - $12, 6 Pastries - $18. Louise operates a card and gift shop. Her current rent is $1,500 per month, and she has broken her business into three divisions as well: Cards, Ceramics, and Frames. She typically sells a package of cards for $5, an average ceramic sells for $25, and the average frame sells for $15. Currently, Thelma rents the left section, and Louise rents the right section. Both sections are equal in square footage. The middle section just became available, and the ladies are considering renting it and sharing it to expand their current operations. The middle section is quite a bit larger and would rent for $3,000 per month. In your calculations, do not round any intermediary calculations and round your final answer to the nearest dollar for the rent and nearest cent for the revenue. Instructions
a. If Thelma and Louise rent the middle section and divide the cost using the stand-alone method, how much cost would be allocated to each?
b. If Thelma and Louise rent the middle section and divide the cost using the incremental method, how much cost would be allocated to each? (rank the cost by who currently pays the most rent)
c. Calculate the differences in allocated cost between the stand-alone method and the incremental method.
d.Which method would you suggest to Thelma and Louise to allocate the additional cost of renting the middle section?
e. Thelma and Louise decided to put together a few options for bundled deals for the customers. 
1) The customer would receive a dozen cookies, a package of cards, and a frame for $30. 
2) The customer would receive a cake and a ceramic for $60. 
3) The customer would receive a six-pack of pastries, a dozen cookies, and a package of cards for $30. Using the stand-alone method of allocating the transaction price of the bundles, how much revenue will Thelma receive, and how much revenue will Louise receive? 
f. Using the same options as part (e), recalculate the division of revenues to Thelma and Louise, using the incremental method. Rank the products based on individual selling prices. 
g. Which method would more accurately represent a fair division of revenue for Thelma and Louise.

Thelma and Louise Operate Businesses in Downtown Lincoln