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HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: From Actuarial Premium Actuarial Actuarial Premium rating Advertising Sales 20% To Premium Rating 80% $ 98,000 33,000 78,000 58,000 Advertising 10% 20 The direct operating costs of the departments (including both variable and fixed costs) are: Sales 10% 60 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.

HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: From Actuarial Premium Actuarial Actuarial Premium rating Advertising Sales 20% To Premium Rating 80% $ 98,000 33,000 78,000 58,000 Advertising 10% 20 The direct operating costs of the departments (including both variable and fixed costs) are: Sales 10% 60 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.

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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HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: From Actuarial Premium Actuarial Premium rating Advertising Actuarial Sales 20% The direct operating costs of the departments (including both variable and fixed costs) are: Premium Rating Advertising Sales 80% 10% 10% 20 60 To $ 98,000 33,000 78,000 58,000 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation. Required 1 Required 2 Required 3 X Answer is not complete. Complete this question by entering your answers in the tabs below. Determine the total costs of the advertising and sales departments after using the direct method of allocation.
Transcribed Image Text:HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: From Actuarial Premium Actuarial Premium rating Advertising Actuarial Sales 20% The direct operating costs of the departments (including both variable and fixed costs) are: Premium Rating Advertising Sales 80% 10% 10% 20 60 To $ 98,000 33,000 78,000 58,000 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation. Required 1 Required 2 Required 3 X Answer is not complete. Complete this question by entering your answers in the tabs below. Determine the total costs of the advertising and sales departments after using the direct method of allocation.
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