Homelife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distrıbution of each service department's efforts (in percentages) to the other departments is shown in the following table: To Premium Rating s0% From Actuarial Advertising Sales 10% Actuarial Premium 10% 25% 15 60 The direct operating costs of the departments (including both variable and fixed costs) are: $ 94,000 29,000 74,e00 54, 800 Actuarial Premium rating Advertising Sales 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the total costs of the advertising and sales departments after using the direct method of allocation. Total Cost Allocated Advertising department Sales department
Homelife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distrıbution of each service department's efforts (in percentages) to the other departments is shown in the following table: To Premium Rating s0% From Actuarial Advertising Sales 10% Actuarial Premium 10% 25% 15 60 The direct operating costs of the departments (including both variable and fixed costs) are: $ 94,000 29,000 74,e00 54, 800 Actuarial Premium rating Advertising Sales 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the total costs of the advertising and sales departments after using the direct method of allocation. Total Cost Allocated Advertising department Sales department
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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