Question

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

Answer 1

If the stand-alone method would be used the startup would pay $60,000.00.

Explanation:

The current cost for Spring Harbor Corporation is $180,000.00, but they use only 70% of the corporate suite.

If the start-up divide the corporate suite, they will use only 30%, but the total cost will be 180,000.00 + 20,000.00 = 200,000.00

We add the values because 180,000.00 counts the cost of maintenance paid before.

Using the percentages to find the cost for the start-up:

`200000*(30)/(100)  = 60000`

So, $60,000.00 will be allocated to the start-up business.