Ronan Corporation Allocates Administrative Costs on the Basis of Staff

question 54

Multiple Choice

Ronan 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. $\begin{array} { | l | l | l | c | c | c | } \hline & \text { Dept. 1 } & & \text { Dept. 2 } & & \text { Total } \\\hline \text { Short-run usage (hours) } & 80.000 & & 120,000 & & 200,000 \\\hline \text { Long-run usage (hours) } & 90,000 & & 110,000 & & 200,000 \\\hline\end{array}$ If Ronan 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)$1,000,000.

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