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Comprehensive Insurance Company has two product lines: health insurance and auto insurance. The two product lines are served by three operating departments, which are necessary for providing the two types of products: claims processing, administration, and sales. These three operating departments are supported by two departments: information technology and operations. The support provided by information technology and operations to the other departments is shown below. Operating Departments Information technology Operations 10% The total costs incurred in the five departments are: Information technology Operations Claims processing Administration Sales Support Departments Information Technology Operations 20% Total costs $ 589,000 1,660,000 310,000 625,000 630,000 $ 3,814,000 Claims Processing Administration 20% 40% 10 50 Sales 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 operations going first), and (c) the reciprocal method. (Do not round intermediate calculations. Round final answers to the nearest dollar.)

Comprehensive Insurance Company has two product lines: health insurance and auto insurance. The two product lines are served by three operating departments, which are necessary for providing the two types of products: claims processing, administration, and sales. These three operating departments are supported by two departments: information technology and operations. The support provided by information technology and operations to the other departments is shown below. Operating Departments Information technology Operations 10% The total costs incurred in the five departments are: Information technology Operations Claims processing Administration Sales Support Departments Information Technology Operations 20% Total costs $ 589,000 1,660,000 310,000 625,000 630,000 $ 3,814,000 Claims Processing Administration 20% 40% 10 50 Sales 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 operations going first), and (c) the reciprocal method. (Do not round intermediate calculations. Round final answers to the nearest dollar.)

FINANCIAL ACCOUNTING
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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Comprehensive Insurance Company has two product lines: health insurance and auto insurance. The two product lines are served by three operating departments, which are necessary for providing the two types of products: claims processing, administration, and sales. These three operating departments are supported by two departments: information technology and operations. The support provided by information technology and operations to the other departments is shown below. Operating Departments Information technology Operations The total costs incurred in the five departments are: Information technology Operations claims processing Administration Sales Total costs Support Departments Information Technology Operations 20% 10% a. Direct Method b. Step Method (Info Tech First) Step Method (Operations First) cReciprocal Method $589,000 1,660,000 310,000 625,000 630,000 $ 3,814,000 Claims Processing Administration 20% 40% 10 50 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 operations going first), and (c) the reciprocal method. (Do not round intermediate calculations. Round final answers to the nearest dollar.) Operating Departments Administration Claims Processing Sales 20% 30 Sales Total
Transcribed Image Text:Comprehensive Insurance Company has two product lines: health insurance and auto insurance. The two product lines are served by three operating departments, which are necessary for providing the two types of products: claims processing, administration, and sales. These three operating departments are supported by two departments: information technology and operations. The support provided by information technology and operations to the other departments is shown below. Operating Departments Information technology Operations The total costs incurred in the five departments are: Information technology Operations claims processing Administration Sales Total costs Support Departments Information Technology Operations 20% 10% a. Direct Method b. Step Method (Info Tech First) Step Method (Operations First) cReciprocal Method $589,000 1,660,000 310,000 625,000 630,000 $ 3,814,000 Claims Processing Administration 20% 40% 10 50 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 operations going first), and (c) the reciprocal method. (Do not round intermediate calculations. Round final answers to the nearest dollar.) Operating Departments Administration Claims Processing Sales 20% 30 Sales Total
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