Answer the following questions using the information below:
The Cold Spring Harbor Corporation currently leases a corporate suite in an office building for a cost of $180,000 a year. Only 70% of the corporate suite is currently being used. A start-up business has proposed a plan that would use the other 30% of the suite and increase the overall costs of maintaining the space by $20,000.
-If the incremental method were used, what amount of cost would be allocated to the start-up business?
A)$20,000
B)$54,000
C)$60,000
D)$74,000

Question

Quizplus · Accepted Answer

According to the incremental method, only the additional cost caused by the start-up business will be allocated to them. Since the start-up business will increase the overall cost by $20,000, this is the amount that will be allocated to them. Therefore, the correct answer is A) $20,000.

Answer the Following Questions Using the Information Below