Exercise 7-28 (Static) 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 Premium Actuarial Rating 80% Advertising 10% Sales 10% 20% 20 60 The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial Premium rating Advertising Sales $ 80,000 15,000 60,000 40,000 Required 11 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 $ 72,250 Sales department $ 67,250