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    Allocation of Administrative Costs

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    Nashville Corporation allocates administrative costs on the basis of staff hours. Short-run monthly usage and long-run monthly usage of staff hours for Operating Departments 1 and 2 follow:

    Dept. 1 Dept. 2 Total

    Short-run usage (hours) 45,000 55,000 100,000
    Long-usage (hours) 48,000 52,000 100,000

    The annual cost of the corporate headquarters is $1,000.000. Required:

    a) Allocate the corporate headquarters cost to the two operating departments using short -run
    usage in each operating department.

    b) Allocate the corporate headquarters cost to the two operating departments using long -run
    usage in each operating department

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    https://brainmass.com/business/accounting/allocation-administrative-costs-562056

    Solution Preview

    Nashville Corporation allocates administrative costs on the basis of staff hours. Short-run monthly usage and long-run monthly usage of staff hours for Operating Departments 1 and 2 follow:
    Dept. 1 Dept. 2 Total
    Short-run usage (hours) 45,000 ...

    Solution Summary

    An allocation of administrative costs are discussed. Staffing hours for operation departments are given.

    $2.19