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.?Department 1Department 2TotalShort-run usage (hours)40,00060,000100,000Long-run usage (hours)45,00055,000100,000If 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. $100,000.
B. $85,000.
C. $80,000.
D. $90,000.
E. None of the answers is correct.
Answer: C
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