Answer the Following Question(s)using the Information Below

question 112

Multiple Choice

Answer the following question(s) using the information below:
The Sturgeon Bay Corporation currently uses a manufacturing facility costing $400,000 per year; 80% of the facility's capacity is currently being used.A start-up business has proposed a plan that would utilize 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?

• A)$20,000
• B)$100,000
• C)$80,000
• D)$84,000
• E)$21,000

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Definitions:

Purchased Goodwill

The intangible asset recorded when a company acquires another business for more than the fair value of its net identifiable assets, representing non-physical assets like reputation and brand value.

Conceptual Viewpoint

An approach or perspective based on abstract ideas or theories rather than on practical applications.

Intangibles

Assets that do not have physical substance but are still valuable because of their intellectual property or other value to the firm.

Expensed

The act of charging a cost as an expense in the income statement in the period it is incurred.