Allocation of administrative costs

Reference no: EM1357812

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

Reference no: EM1357812

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