Romano Corporation Allocates Administrative Costs on the Basis of Staff

question 50

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. $$\begin{array} { l l l l } & \underline {\text { Dept. 1 }} & \underline {\text { Dept. 2 }} & \underline { \text { Total } } \\\text { Short-run usage (hours) } & 80,000 & 120,000 & 200,000 \\\text { Long-run usage (hours) } & 90,000 & 110,000 & 200,000\end{array}$$ 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) None of the other answers are correct.

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