7) If the incremental method were used, what amount of cost would be allocated to the start-upbusiness?A) $20,000B) $54,000C) $60,000D) $74,000

To arrive at the correct answer regarding the cost allocated to the start-up business using the incremental method, we need to perform a breakdown of the problem, considering costs that are directly related to the business's initiation.

1. ### Break Down the Problem

1. Identify the total costs associated with the start-up.
2. Determine the costs that would be applicable for allocation based on the incremental method.

2. ### Relevant Concepts

The incremental method typically involves considering only the additional or incremental costs directly related to the start-up.

3. ### Analysis and Detail

Without specific figures provided in the prompt for costs, we'll assume that the values provided in the options represent total costs that could be allocated.

4. ### Verify and Summarize

We need to analyze each option to determine which aligns best with costs typically associated with start-ups.

Assuming the incremental method allocates costs that are primarily variable and excludes fixed costs that are not subject to change with the initiation of the business:

• A) $20,000 (likely too low for start-up costs)
• B) $54,000 (could be a potential allocation based on certain variables)
• C) $60,000 (another plausible amount)
• D) $74,000 (potentially representing higher capital expenses)

To verify, if the incremental costs should represent a moderate to high amount since start-ups usually incur significant initial costs, thus leading to:

Final Answer

Given that the options range widely but considering the typical costs that might be allocated, a logical choice based on common start-up scenarios would suggest C) $60,000 as a reasonable allocation.