Nash Corporation Allocates Administrative Costs on the Basis of Staff

question 43

Multiple Choice

Nash 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.
Variable and fixed administrative costs total $180,000 and $400,000,respectively.If Nash uses dual-cost accounting procedures,the total amount of administrative cost to allocate to Department 2 would be:

• A)$301,600.
• B)$307,000.
• C)$313,600.
• D)$319,000.
• E)some other amount.

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Definitions:

Employee Hours

Employee hours track the amount of labor time worked by employees, used for payroll, scheduling, and operational efficiency analyses.

Square Feet

A unit of area measurement used primarily in the United States, equal to the area of a square with sides of one foot.

Direct Method

A method of preparing the cash flow statement where major classes of gross cash receipts and gross cash payments are disclosed, providing a clear view of cash flow from operating activities.

Service Department

A division within a company responsible for providing support, maintenance, or other services to customers or other departments.