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JJ Enterprises currently manufactures two products, A and B. It is considering adding a new product, Product C. The following table shows current information for products A and B, as well as projected data for Product C.
*NOTE: If Product C is produced, one-fourth of the company's common costs, which are fixed costs, will be allocated to Product C, with one-half and one-fourth allocated to products A and B, respectively.
-If JJ Enterprises adds Product C,the total incremental cost will be:
A)$740,000
B)$330,000
C)$137,500
D)$130,000

Question

Use the following to answer questions 
JJ Enterprises currently manufactures two products, A and B. It is considering adding a new product, Product C. The following table shows current information for products A and B, as well as projected data for Product C.
  *NOTE: If Product C is produced, one-fourth of the company's common costs, which are fixed costs, will be allocated to Product C, with one-half and one-fourth allocated to products A and B, respectively.
-If JJ Enterprises adds Product C,the total incremental cost will be:
A)$740,000 
B)$330,000 
C)$137,500 
D)$130,000

Quizplus · Accepted Answer

The total incremental cost for adding Product C is $130,000.

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