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Emrald Corp currently uses a manufacturing facility costing $490,000 per​ year; 84​% of the​ facility's capacity...

Emrald Corp currently uses a manufacturing facility costing $490,000 per​ year; 84​% of the​ facility's capacity is currently being used. A start−up business has proposed a plan that would utilize the other 16​% of the facility and increase the overall costs of maintaining the space by 7​%. If the stand−alone method were​ used, what amount of cost would be allocated to the start−up business?

A. $83,888

B. $71,344

C. $65,856

D. $78,400

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Answer #1

Cost allocated to the startup business

= 490,000 + (490,000*7%) * 16%

= 524,300 * 16%

= 83,888

Option A is the answer
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