HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two productiondepartments (advertising and sales). The distribution of each service department's efforts in percentages) to the otherdepartments is shown in the following table:FromActuarialPremiumActuarial20%ToActuarial $80,000Premium15,000ratingAdvertising 60,000Sales40,000PremiumRating Advertising Sales80810810%2060The direct operating costs of the departments (including both variable and fixed costs) are:Required:1. Determine the total costs of the advertising and sales departments after using the direct method or allocation.2. Determine the total costs of the advertising and sales departments after using the step method of allocation.3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.

The service department cost can be allocated to different production departments using different…

HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: Premium Actuarial Rating Advertising Sales 80% 10% 10% 20% 20 60 From Actuarial Premium то The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial $80,000 Premium 15,000 rating Advertising 60,000 Sales 40,000 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method or allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.

HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: Premium Actuarial Rating Advertising Sales 80% 10% 10% 20% 20 60 From Actuarial Premium то The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial $80,000 Premium 15,000 rating Advertising 60,000 Sales 40,000 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method or allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: From Actuarial Premium To Premium Rating 70% Actuarial 20% The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial $ 81,000 Premium rating Advertising Sales 16,000 61,000 41,000 Advertising sales, 15% 20 15% 60 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.
HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table From Actuarial Premium Actuarial Actuarial Premium rating Advertising Sales Premium Rating 80% To 4 20% The direct operating costs of the departments (including both variable and fixed costs) are $ 92,000 27,000 72,000 52,000 Advertising Sales 10% 10% 60 20 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of allocation 2. Determine the total costs of the ad 2
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