Answer the following questions using the information below:
Harbor Corp currently leases a corporate suite in an office building for a cost of $280,000 a year. Only 80% of the corporate suite is currently being used. A start-up business has proposed a plan that would use the other 20% of the suite and increase the overall costs of maintaining the space by $20,000.
-If the incremental method were used,what amount of cost would be allocated to the start-up business?
A) $20,000
B) $300,000
C) $60,000
D) $75,000

Question

Quizplus · Accepted Answer

The incremental cost method allocates only the additional costs incurred due to the new usage. The start-up business increases costs by $20,000, so that is the amount allocated to them.

Answer the Following Questions Using the Information Below