Grassley Corporation Allocates Administrative Costs on the Basis of Staff

Multiple Choice

Grassley 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.

If Grassley uses dual-cost accounting procedures and variable administrative costs total $200,000, the amount of variable administrative cost to allocate to Department 1 would be:

A) $80,000.
B) $85,000.
C) $90,000.
D) $100,000.
E) None of the answers is correct.