Two Entities, Cooper Company and Magic Company, Share a Common

Multiple Choice

Two entities, Cooper Company and Magic Company, share a common warehouse facility.Total costs for the facility are budgeted at $2,000,000.Accountants have estimated that if Cooper 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 Cooper and Magic if the incremental allocation method is used? Assume that Magic is he primary party.

A) $0; $1,400,000
B) $0; $2,000,000
C) $1,400,000; $600,000
D) $700,000; $1,300,000
E) $600,000; $1,400,000