Stand-Alone and Incremental Cost Methods, Fairness A graduate student interviewing for a full-time teaching position has...

(A) Stand alone cost:

For public university, it is 500/1500=0.33

0.33* 950=316.66 or 317

For city college, it is 250/1500=0.166

0.166*950=158.33

For private university,it is 750/1500=0.5

0.5*950=475

The combined cost will be 950(317+158+475)

(b) Incremental costs :

Considering public college as primary user,

public university =500

city college= 950-500=450/2=225

private university =225

(c) Stand alone method is more fair as in incremental costing it is difficult to set a primary user to whom the entire standalone cost needs to be assigned and there also develops disputes based on what to be selected as the primary user.Moreover,incremental cost allocation is more complicated and confusing.

Incremental costing :

Public university is considered the primary user:

Public university=500.

City college= 950-500/2=225