Better Health Company has two service departments — actuarial and premium rating, and two operations departments — marketing and sales. The distribution of each service department's efforts to the other departments is shown below: FROMTOActuarialRatingMarketingSalesActuarial0%40%20%40%Rating25%0%37.5%37.5% The direct operating costs of the departments (including both variable and fixed costs) were as follows: Actuarial$ 75,000Premium Rating$ 50,000Marketing$ 75,000Sales$ 85,000 The total cost accumulated in the marketing department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar; assume the actuarial department goes first): Multiple Choicea)$155,000.b)$130,000.c)$159,000.d)$164,000.e)$126,000.

The step method of cost allocation is a technique used in managerial accounting to allocate indirect…

Answered: Better Health Company has two service…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter13: Emerging Topics In Managerial Accounting

Section: Chapter Questions

Problem 41E: Bradshaw Company reported sales of 5,000,000 in 20X1. At the end of the fiscal year (June 30, 20X1),...

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Better Health Company has two service departments — actuarial and premium rating, and two operations departments — marketing and sales. The distribution of each service department's efforts to the other departments is shown below:

FROM	TO
Actuarial	Rating	Marketing	Sales
Actuarial	0%	40%	20%	40%
Rating	25%	0%	37.5%	37.5%

The direct operating costs of the departments (including both variable and fixed costs) were as follows:

Actuarial	$ 75,000
Premium Rating	$ 50,000
Marketing	$ 75,000
Sales	$ 85,000

The total cost accumulated in the marketing department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar; assume the actuarial department goes first):

Multiple Choice

a)$155,000.

b)$130,000.

c)$159,000.

d)$164,000.

e)$126,000.

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