Comprehensive Insurance Company has three operating departments: claims processing, administration, and sales. These three operatingdepartments are supported by two service departments: information technology and accounting. The support provided by information technologyand accounting to the other departments is shown below.Information technologyAccountingThe total costs incurred in the five departments are:Information technologyAccountingClaims processingAdministrationSalesTotal costsa. Direct Methodb. Step Method (Info Tech First)Step Method (Accounting First)c. Reciprocal MethodService DepartmentsInformationTechnology$ 560,0001,730,000250,000599,000650.000$ 3,789,00010%Required:Determine the total costs in each of the three operating departments, after departmental allocations, using (a) the direct method, (b) the stepmethod (first for information technology going first in the allocation and then for accounting going first), and (c) the reciprocal method. (Do notround intermediate calculations. Round final answers to the nearest dollar.)Operating DepartmentsClaimsAccounting Processing Administration Sales20%20%40% 20%105030Operating DepartmentsAdministrationClaims ProcessingSalesTotal

Cost Allocation is the process of identifying, aggregating, and assigning all the costs incurred in…

Comprehensive Insurance Company has three operating departments: claims processing, administration, and sales. These three operating departments are supported by two service departments: information technology and accounting. The support provided by information technology and accounting to the other departments is shown below. Information technology Accounting The total costs incurred in the five departments are: Information technology $ 560,000 1,730,000 Accounting 250,000 Claims processing Administration 599,000 650,000 $3,789,000 Sales Service Departments Information Technology 10% Total costs Accounting 20% Operating Departments Claims Processing 20% 10 Administration Sales 40% 50 20% 30 Required: Determine the total costs in each of the three operating departments, after departmental allocations, using (a) the direct method, (b) the step method (first for information technology going first in the allocation and then for accounting going first), and (c) the reciprocal method. (Do not round intermediate calculations. Round final answers to the nearest dollar.)

Comprehensive Insurance Company has three operating departments: claims processing, administration, and sales. These three operating departments are supported by two service departments: information technology and accounting. The support provided by information technology and accounting to the other departments is shown below. Information technology Accounting The total costs incurred in the five departments are: Information technology $ 560,000 1,730,000 Accounting 250,000 Claims processing Administration 599,000 650,000 $3,789,000 Sales Service Departments Information Technology 10% Total costs Accounting 20% Operating Departments Claims Processing 20% 10 Administration Sales 40% 50 20% 30 Required: Determine the total costs in each of the three operating departments, after departmental allocations, using (a) the direct method, (b) the step method (first for information technology going first in the allocation and then for accounting going first), and (c) the reciprocal method. (Do not round intermediate calculations. Round final answers to the nearest dollar.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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