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.

The total costs incurred in the five departments are:
Information technology..........................600000
Operations.........................................1800000
Claims processing................................450000
Administration...................................850000
Sales...............................................650000
Total costs........................................4350000
Required
Use 4 or more decimal places (e.g., 33.3333%) in your calculations. Allocate the $4,350,000 total departmental costs to the three operating departments using (a) the direct method, (b) the step method (once for information technology and once for operations going first in the allocation), and (c) the reciprocal method.

Transcribed Image Text:

Support Departments Information Technology Operating Departments Claims Processing 20% 10 Administration 40% Sales 冰)% Information Technology Operations 20% 50 30