The Long Term Care Plus 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: FROMTO Actuarial Rating Marketing SalesActuarial0% 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$86,000Premium Rating$60,000Marketing$86,000Sales$96,000 The total cost accumulated in the sales 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 that the actuarial department goes first): Multiple Choice $146,400. $150,400. $177,600. $181,600. $186,600.

Costing is defined as a mechanism used to determine the expenses paid by industry while preparing…

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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

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The Long Term Care Plus 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	$	86,000
Premium Rating	$	60,000
Marketing	$	86,000
Sales	$	96,000

The total cost accumulated in the sales 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 that the actuarial department goes first):

Multiple Choice

$146,400.
$150,400.
$177,600.
$181,600.
$186,600.

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