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HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service
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 Advertising Sales 70% 15% 15% 20% 20 60 The direct operating costs of the departments (Including both variable and fixed costs) are: Actuarial Premium rating Advertising Sales Required: $ 97,000 32,000 77,000 57,000 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. Advertising department Sales department Total Cost Allocated Required t Required 2 >
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