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 Claims processing Administration Information technology Operations The total costs incurred in the five departments are: Sales Support Departments Total costs Information Technology Operations 20% 10% $ 641,000 1,600,000 310,000 642,000 570,000 $3,763,000 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 Claims processing Administration Information technology Operations The total costs incurred in the five departments are: Sales Support Departments Total costs Information Technology Operations 20% 10% $ 641,000 1,600,000 310,000 642,000 570,000 $3,763,000 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.)

Managerial Accounting

15th Edition

ISBN:9781337912020

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

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

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 10E: Support department cost allocation comparison Refer to your answers to Exercises 7-9. Compare the...

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