Reference no: EM132972581

Soprano 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.

                                          Department 1           Department 2              Total

Short-run usage (hours)           80,000              120,000               200,000

Long-run usage (hours)               90,000               110,000           200,000

Problem 1: If Soprano uses dual-cost accounting procedures and fixed administrative costs total $1,000,000, the amount of fixed administrative costs to allocate to Department 1 would be:

Option 1: $450,000.

Option 2: $850,000.

Option 3: $400,000.

Option 4: $500,000.

Option 5: None of the answers is correct.