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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Solution Summary
An allocation of administrative costs are discussed. Staffing hours for operation departments are given.
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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 ...
Purchase this Solution
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