Wednesday, May 30, 2012

1. If the stand-alone method were used, what amount of cost would be allocated to the start-up business

ACCOUNTING

Multiple Choice

The Egg Harbor Corporation currently leases a corporate suite in an office building for a cost of $90,000 a year. Only 70% of the corporate suite is currently being used. A start-up business has proposed a plan that would utilize the other 30% of the suite and increase the overall costs of maintaining the space by $10,000.


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

a. $10,000

b. $27,000

c. $30,000

d. $37,000

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