Nash Corporation Allocates Administrative Costs on the Basis of Staff

question 39

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. $$\begin{array} { l l l l } & \underline {\text { Dept. 1 }} & \underline {\text { Dept. 2 }} & \underline { \text { Total } } \\\text { Short-run usage (hours) } & 45,000 & 55,000 & 100,000 \\\text { Long-run usage (hours) } & 48,000 & 52,000 & 100,000\end{array}$$ 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) None of the other answers are correct.

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