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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% Premium Rating 80% To Advertising Sales 10% 10% 20 60 The direct operating costs of the departments (including both variable and fixed costs) are: $ 92,000 27,000 72,000 52,000 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

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% Premium Rating 80% To Advertising Sales 10% 10% 20 60 The direct operating costs of the departments (including both variable and fixed costs) are: $ 92,000 27,000 72,000 52,000 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

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 Sales Actuarial 20% Premium Rating 80% The direct operating costs of the departments (including both variable and fixed costs) are: $ 92,000 27,000 72,000 52,000 Required 1 Required 2 Advertising department Sales department To 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 allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation. Advertising Sales 10% 10% 20 60 Complete this question by entering your answers in the tabs below. Required 3 Determine the total costs of the advertising and sales departments after using the direct method of allocation. Total Cost Allocated < Required 1 Required 2 >
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 Sales Actuarial 20% Premium Rating 80% The direct operating costs of the departments (including both variable and fixed costs) are: $ 92,000 27,000 72,000 52,000 Required 1 Required 2 Advertising department Sales department To 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 allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation. Advertising Sales 10% 10% 20 60 Complete this question by entering your answers in the tabs below. Required 3 Determine the total costs of the advertising and sales departments after using the direct method of allocation. Total Cost Allocated < Required 1 Required 2 >
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