Answer the following questions using the information below:
The Carpentaria Corporation currently uses a manufacturing facility costing $550 000 per year;80% of the facility's capacity is currently being used.A start-up business has proposed a plan that would utilise 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?

Question

Quizplus · Accepted Answer

The stand-alone method allocates the full cost of the manufacturing facility to the start-up business because they are the only ones using the additional 20%.

The total cost of the manufacturing facility with the 5% increase is $550,000 * 1.05 = $577,500.

The cost allocated to the start-up business would then be 20% of $577,500, since they would use that portion of the facility.

20% of $577,500 = $115,500

Therefore, the answer is D) $115,500.

Answer the Following Questions Using the Information Below