Assume the same facts as in Problem 33, except that both states employ a three-factor formula, under which sales are double-weighted. The property factor in A is computed using historical cost, while this factor in B is computed using the net depreciated basis. Neither A nor B includes rent payments in the property factor.

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State A State B Total Sales Property $1,200,000 400,000 $1,600,000 Average historical cost 500,000 300,000 (300,000) 1 800,000 00,000) (400,000) 500,000 35,000 Average accumulated depreciation Payroll Rent expense 2,500,000 35,000