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 $ 60,000 Premium Rating $ 40,000 Marketing $ 60,000 Sales $ 70,000
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 $ 60,000 Premium Rating $ 40,000 Marketing $ 60,000 Sales $ 70,000
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 19E: Refer to the data in Exercise 7.18. When the capacity of the HR Department was originally...
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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 | $ | 60,000 |
Premium Rating | $ | 40,000 |
Marketing | $ | 60,000 |
Sales | $ | 70,000 |
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):
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