Assume the Cost of a Limousine Ride from Toronto's Pearson

question 54

Essay

Assume the cost of a limousine ride from Toronto's Pearson International Airport to downtown Toronto is $88, plus $10 per person in the taxi, plus $1 for each luggage item in the trunk. Susan is on a trip with George, a business associate from another department. Susan has one luggage item and her associate has three.
a)Compute the portion of the limousine fare allocated to Susan using the stand-alone method.
b)Compute the portion of the limousine fare allocated to Susan using the incremental cost allocation method if Susan is considered the primary user.
c)Compute the portion of the limousine fare allocated to Susan using the incremental cost allocation method if George is considered the primary user.
d)Which method is the most fair? Explain your reasoning.

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Definitions:

Cash Functions

The various roles and activities associated with cash management in a business, including collection, disbursement, and investment.

Treasurer

An officer of a company or organization responsible for managing the institution's treasury, including financial planning, risk management, and investment.

Chief Operations Officer

A senior executive tasked with overseeing the day-to-day administrative and operational functions of a company.

Working Capital Management

The management of a company's short-term assets and liabilities to ensure its ongoing operational efficiency and financial stability.