Abstract Game theory is applied to the problem of joint cost allocation in forest management. The theory is used to define bounds (limits) to cost allocations. These traditional bounds are further defined in the context of potentially relevant benefit information to arrive at "benefit-included" bounds. These benefit-included bounds are consistent with both game theory and the early water resources principles that were based on cost separability. The traditional bounds and the benefit-included bounds are applied to a multipurpose forestry case study. The application is facilitated using the "nucleolus" cost allocation technique. The nucleolus provides a unique allocation that does not breach the bounds. The previously obscure calculation procedure of the nucleolus is clarified by example. For. Sci. 33(1):81-88.