Question

Granger Printing currently uses a manufacturing facility costing $560,000 per year; 90% of the facility's capacity is currently being used. A start-up business has proposed a plan that would utilize the other 10% of the facility and increase the overall costs of maintaining the space by 11%. If the incremental method were used, what amount of cost would be allocated to the start-up business

Answer 1

the amount of cost that allocated is $61,600

Step-by-step explanation:

The computation of the amount of cost that allocated is shown below;

= The costing of the manufacturing facility × increase percentage of the overall cost for maintaining the space

= $560,000 × 11%

= $61,600

hence, the amount of cost that allocated is $61,600