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 incremental method were used,what amount of cost would be allocated to the start-up business?

Question

Quizplus · Accepted Answer

The incremental cost for the start-up business is calculated based on the 5% increase in overall costs due to utilizing the additional 20% capacity. The current cost is $550,000, so a 5% increase is $550,000 * 0.05 = $27,500. This amount represents the additional cost attributed to the start-up business.

Answer the Following Questions Using the Information Below