Soprano Corporation Allocates Administrative Costs on the Basis of Staff

Multiple Choice

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.

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

A) $400,000.
B) $450,000.
C) $500,000.
D) $850,000.
E) None of the answers is correct.