Allocation of Common Costs. The cities of Albany, Troy and Schenectady are considering the implementation of a new program to handle disposal of hazardous waste to comply with a new, more stringent state law. Because of the close proximity of the three cities, a joint program has been suggested. The annual cost of separate programs and a joint program are:

1. Allocate the $5,000,000 cost of the joint program to each of the three cities using:

a. The stand-alone method

b. The incremental-allocation method (in the order of the most waste to the least waste).

2. How do you think the citizens of each community would feel about each of the two methods ofallocation?

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City Capacity Cost Albany Troy Schenectady Joint Program 100,000 tons 25,000 tons 175,000 tons 300,000 tons $2,100,000 $1,400,000 $3,500,000 S5,000,000