Tram Inc. and Drury Inc. are two small manufacturing companies that are considering leasing a...
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Tram Inc. and Drury Inc. are two small manufacturing companies that are considering leasing a machine together. If Tram rents the machine on its own, it will cost $40,000. If Drury rents the machine on its own, it will cost $60,000. If they decide to rent the machine together, it will cost them 80,000.
Which of the following is true?
Tram would prefer the stand-alone cost allocation method to the Shapley value cost allocation method
Drury's cost under the Shapley value method would be $60,000
Both companies would be better off using the Shapley value cost allocation method compared with the stand-alone cost allocation method
Drury would prefer the stand-alone cost allocation method to the Shapley value cost allocation method
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