Two Entities, Burch Company and Carey Company, Share a Common

question 164

Multiple Choice

Two entities, Burch Company and Carey Company, share a common warehouse facility.Total costs for the facility are budgeted at $1,000,000.Accountants have estimated that if Burch Company did not use the facility the cost incurred would be reduced by 30 percent.What amount of the budgeted cost should be allocated, respectively, to Burch and Carey if the incremental allocation method is used?

• A)$0; $700,000
• B)$0; $1,000,000
• C)$198,000; $802,000
• D)$300,000; $700,000
• E)$700,000; $300,000