Romano Corporation Allocates Administrative Costs on the Basis of Staff

question 38

Multiple Choice

Romano Corporation allocates administrative costs on the basis of staff hours.Short-run monthly usage and anticipated long-run monthly usage of staff hours for Operating Departments 1 and 2 follow.
If Romano uses dual-cost accounting procedures and fixed administrative costs total $1,000,000,the amount of fixed administrative cost to allocate to Department 1 would be:

• A)$400,000.
• B)$450,000.
• C)$500,000.
• D)$850,000.
• E)some other amount.

---

Definitions:

General Journal Entries

General journal entries are the initial records of financial transactions in the double-entry accounting system, entered in the general journal.

Terms 2/10, N/30

A set of credit terms that offer a discount of 2% if payment is made within 10 days; otherwise, the full invoice amount is due within 30 days.

Perpetual Inventory Method

An accounting practice where the inventory records are updated immediately after every addition or subtraction, providing a continuously accurate inventory level.

Journalize

The act of recording business transactions in the chronological accounting record known as the journal.