15-26 Allocation of overhead costs.

The cities of Albany, Troy and Schenectady are considering implementing a new program to tackle hazardous waste management to comply with a new, stricter law. Due to the proximity of these three countries, a joint program has been suggested. The annual cost of the separate programs and the joint program are

City of Albany Capacity (tons)100,000 Cost (in dollars) 2,100,000

Troy Capacity (tons) 25,000 Cost (in dollars)1,400,000

Schenectady Capacity (tons) 175,000 Cost (in dollars)3,500,000

Joint program

5,000,000

Required:

1. Allocate $5,000,000 of the cost of the joint program to each of the three states by

used:

a the "stand-alone" method.

b. ascending distribution method (from dirtiest to least dirty). 2. How do you think the citizens of each community will feel about each of the two methods of distribution