Gadubhai 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.AdministrationSalesSupport DepartmentsInformation technologyOperationsThe total costs incurred in the five departments are:Information technologyOperationsClaims processingTotal costsInformationTechnologyOperations20%10%$ 592,0001,680,000310,000611,000650,000$3,843,000Operating DepartmentsClaimsProcessing20%10Administration40%50Sales20%30Required: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.)

The support department costs are allocated to operating departments to determine the correct cost of…

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 Sales Support Departments Information technology Operations The total costs incurred in the five departments are: Total costs Information Technology Operations 20% 10% $ 592,000 1,680,000 310,000 611,000 650,000 $ 3,843,000 Claims Processing Administration 20% 10 40% 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 Sales Support Departments Information technology Operations The total costs incurred in the five departments are: Total costs Information Technology Operations 20% 10% $ 592,000 1,680,000 310,000 611,000 650,000 $ 3,843,000 Claims Processing Administration 20% 10 40% 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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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