Comprehensive Insurance Company has two product lines: health insurance and auto Insurance. The two product lines are served bythree operating departments, which are necessary for providing the two types of products: claims processing, administration, andsales. These three operating departments are supported by two departments: information technology and operations. The supportprovided by information technology and operations to the other departments is shown below.Information technologyOperationsSupport DepartmentsInformationOperating DepartmentsClaimsTechnologyOperations20%Processing20%Administration48%Sales20%10%105030The total costs incurred in the five departments are:Information technologyOperationsClaims processingAdministrationSalesTotal costs$ 578,0001,780,000290,000630,000650,000$ 3,928,000Required: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 reciprocalmethod. (Do not round intermediate calculations. Round final answers to the nearest dollar.)Operating DepartmentsClaims ProcessingAdministrationSalesTotala. Direct Method$0b. Step Method (Info Tech First)$0Step Method (Operations First)c. Reciprocal Method$0$0

Cost allocation to support departmentsWhen the company has more departments, there will be a…

Answered: Comprehensive Insurance Company has two…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 3E: For each of the following support departments, identify a cost driver that could be used for...

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