Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Exercise 7-28 (Algo) Departmental Cost Allocation (LO 7-3, 7-5) HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments
Exercise 7-28 (Algo) Departmental Cost Allocation (LO 7-3, 7-5) 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: Actuarial Premium Rating Advertising 80% 10% 15 From Actuarial Premium Sales 10% 60 25% The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial Premium rating Advertising Sales $ 94,000 29,000 74,000 54,000 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the total costs of the advertising and sales departments after using the direct method of allocation. Total Cost Allocated Advertising department Sales department Required 1 Required 2 > Required 1 Required 2 Required 3 Determine the total costs of the advertising and sales departments after using the step method of allocation. Total Cost Allocated Advertising department Sales department Required 1 Required 2 Required 3 Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) Total Cost Allocated Advertising department Sales department
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started