Exercise 7-28 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: From Actuarial Premium TO Actuarial Premium Rating Advertising 80 % 10% 20 % 20 Sales 10% 60 The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial Premium rating Advertising Sales $98,000 33,000 78,000 58,000 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method or 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. Exercise 7-28 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: From Actuarial Premium TO Actuarial Premium Rating Advertising 80 % 10% 20 % 20 Sales 10% 60 The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial Premium rating Advertising Sales $98,000 33,000 78,000 58,000 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method or 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