Nichols Corporation Allocates Administrative Costs on the Basis of Staff

Multiple Choice

Nichols 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.

Variable and fixed administrative costs total $180,000 and $400,000, respectively. If Nichols uses dual-cost accounting procedures, the total amount of administrative cost to allocate to Department 2 would be:

A) $301,600.
B) $307,000.
C) $313,600.
D) $319,000.
E) None of the answers is correct.