Peterborough Controls Ltd

Multiple Choice

Peterborough Controls Ltd.currently utilizes a manufacturing facility for $250,000 per year.The facility is used at 75 percent capacity.The shipping department has proposed a plan in which it would utilize the other 25 percent plant capacity for the company's shipping plus handling the shipping of several nearby businesses.The company's consulting firm estimated that the overall costs of maintaining the space would increase by 10 percent.The shipping manager is interested in the amount that would be allocated under the incremental method.

A) $70,000
B) $68,750
C) $62,500
D) $25,000
E) $24,000