Answer the following questions using the information below:
The Salmon Bay Corporation currently uses a manufacturing facility costing $200,000 per year; 80% of the facility's capacity is currently being used.A start-up business has proposed a plan that would utilize the other 20% of the facility and increase the overall costs of maintaining the space by 5%.
-If the stand-alone method were used, what amount of cost would be allocated to the start-up business?
A)$40,000
B)$50,000
C)$10,000
D)$42,000

Question

Quizplus · Accepted Answer

The stand-alone method allocates costs based on the capacity used by each activity. In this case, the start-up business would use 20% of the facility's capacity, so it would be allocated 20% of the total costs, which is $42,000.

Answer the Following Questions Using the Information Below