Case #3 Lifetime Insurance Company has two supporting departments (actuarial and premium), and two production departments (advertising and sales). Data from operations for the current year are as follows: Actuarial $350,000 Premium $172,000 20% Manufacturing overhead costs Support provided by Actuarial Support provided by Premium Advertising $225,000 30% 45% Sales $125,000 50% 41% 14% Required (A) Allocate the two support departments' costs to the two operating departments using the direct method (round to the nearest dollar). (B) Allocate the two support departments' costs to the two operating departments using the step down with the Actuarial department allocating first (round to the nearest dollar). (C) Allocate the two support departments' costs to the two operating departments using the reciprocal method (round to the nearest dollar). (D) Discuss each of the three allocation methods. Which method do you recommend the company should use? Why? Case #4