=+13-26 K Allocation of common costs OBJECTIVE 4 The councils of Brisbane, Ipswich and Toowoomba 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:

City Capacity Cost Ipswich 100 000 tonnes $2 100 000 Toowoomba 25 000 tonnes $1 400 000 Brisbane 175 000 tonnes $3 500 000 Joint program 300 000 tonnes $5 000 000 Required 1 Allocate the $5000000 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).