Trifecta Inc. allocates administrative costs on the basis of square footage. Short-run monthly usage and anticipated long-run monthly usage of square footage for Operating Departments 1 and 2 follow. $\begin{array} { l c c c }
& \text { Dept. 1 } & \text { Dept. 2 } & \text { Total } \
\text { Short-run usage } & 30,000 & 70,000 & 100,000 \
\text { Long-run usage } & 50,000 & 50,000 & 100,000
\end{array}$ If Trifecta uses dual-cost accounting procedures and variable administrative costs total $320,000, the amount of variable administrative cost to allocate to Department 1 would be:
A)$96,000.
B)$128,000.
C)$160,000.
D)$192,000.
E)$320,000.

Question

Trifecta Inc. allocates administrative costs on the basis of square footage. Short-run monthly usage and anticipated long-run monthly usage of square footage for Operating Departments 1 and 2 follow. $\begin{array} { l c c c } 
& \text { Dept. 1 } & \text { Dept. 2 } & \text { Total } \
\text { Short-run usage } & 30,000 & 70,000 & 100,000 \
\text { Long-run usage } & 50,000 & 50,000 & 100,000
\end{array}$ If Trifecta uses dual-cost accounting procedures and variable administrative costs total $320,000, the amount of variable administrative cost to allocate to Department 1 would be:
A)$96,000.
B)$128,000.
C)$160,000.
D)$192,000.
E)$320,000.

Quizplus · Accepted Answer

The variable administrative costs are allocated based on short-run usage. Department 1 uses 30,000 out of 100,000 total square feet, so it receives 30% of the $320,000 variable costs, which is $96,000.

Trifecta Inc If Trifecta Uses Dual-Cost Accounting Procedures and Variable Administrative Costs