Departmental Cost Allocation: Service CompanyComprehensive Insurance Company has two products lines: health insurance and auto insurance. The two products 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 department is shown below:

Support DepartmentsOperating Departments

Information TechnologyOperationsClaims ProcessingAdministrativeSales

Information

Technology---------20%20%40%20%

Operations10%----------105030

The total cost incurred in the five departments are:

Information technology$600,000

Operations1,800,000

Claims Processing450,000

Administration850,000

Sales650,000

Total costs$4,350,000

Required:Use 4 or more decimals places (e.g., 33.3333%) in your calculations. 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 the information technology going first in the allocation and then for operating going first), and (c) the reciprocal method.